Insights

Why Beyond Meat Stock Fell 7% on Thursday

What happened

Beyond Meat (NASDAQ: BYND) investors lost ground in the market on Thursday ahead of the plant-based meat specialist’s imminent earnings release. Shares fell 7% by 3 p.m. ET, compared with a 0.1% drop in the S&P 500. That slump added to significant short-term losses for the food stock, which is down roughly 50% so far in 2022.

It came as investors worried about bad news on the way from the management team in an earnings update scheduled for later on Thursday afternoon.

So what

Beyond Meat will report operating results for the selling period that ran through late June. Expectations are low heading into that announcement — and for good reason. The company in May reported sluggish sales growth to start fiscal 2022, with revenue rising just 1%. Most Wall Street pros are looking for another period of nearly zero growth in the second quarter as revenue holds steady at $150 million.

Beyond Meat has seen weaker demand as consumers’ preferences swing back toward more established meat products at grocery stores. Competition is rising in the space, too, as many major supermarket chains offer their own branded products. That sales pressure helped push losses to a staggering 92% of sales last quarter, and investors are looking for more losses in Q2.

Now what

Beyond Meat could surprise Wall Street on the positive side, too. The company spent more cash on promotions and new releases over the past few months. These promotions include a new product line aimed at outdoor grilling fans. Beyond Meat also signed up global celebrity Kim Kardashian as a brand promoter.

Still, it will likely be a few quarters before investors can feel confident that the company is on a stable growth path and its days of net losses are over. As a result, look for more volatility in the food stock in the wake of the earnings report on Thursday afternoon.

Demitri Kalogeropoulos 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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