Insights

Why Beyond Meat Is Jumping Higher Today

What happened

Shares of Beyond Meat (NASDAQ: BYND) are up 5.6% in morning trading Tuesday, following a holiday weekend that saw a new rival about to enter the market.

Kellogg (NYSE: K) announced it was splitting its company in three, with one of the new businesses to be its plant-based unit, which has about $340 million in net sales. Beyond Meat had less than $465 million in sales last year.

Image source: Getty Images.

So what

The stock market as a whole is on the rise today, with the Dow Jones Industrial Average rising over 508 points, so it may be helping to lift Beyond Meat, too. Yet the plant-based meat alternative maker remains a heavily shorted stock, with over 40% of its shares sold short, and meme stock investors have been known to rally upon such pressured stocks.

Last week the stock had a couple of notable up days, including one where it rose by double-digit percentages, but that has really helped offset the better than 80% loss in value over the past year.

Now what

Kellogg is touting the spinoff unit as being “a leading, profitable, pure-play plant-based foods company.” That would be a tough competitor for Beyond Meat, which continues to produce substantial losses, despite having been in the business for years and having come to define the market early on.

In other words, Beyond Meat’s stock may be up today for reasons beyond the fundamentals of its business, which increasingly looks like it’s in dire trouble and now faces a potentially tough new rival.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Beyond Meat, Inc. The Motley Fool has a disclosure policy.

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