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Why Beyond Meat Stock Sank 24.5% In December
Shares of Beyond Meat (NASDAQ: BYND) fell 24.5% in December, according to data from S&P Global Market Intelligence. The plant-based meat company continues to slide as the world trends away from its products. The company posted solid revenue growth last quarter but continues to lose money. After these losses, Beyond Meat stock is now down 98% from its all-time highs.
Here's why the stock was falling yet again in December.
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Rising revenue, but heavy losses
Beyond Meat's goal was to build a fake meat product that could persuade meat eaters to switch to plant-based alternatives. For a few years, it looked as if the company was making progress on this goal when revenue reached $450 million in 2022. But then things started to go downhill. Beyond Meat's revenue started to shrink as the hype around plant-based alternatives faded, along with a backlash against its large ingredients list. That led to a huge free cash flow burn and the stock price collapse.
Today. the company has made some progress improving these losses, but it's still burning over $100 million in free cash flow a year with stagnating revenue. Revenue was up slightly last quarter but is still down significantly over the past 12 months compared with its all-time high of $450 million. Importantly, the company has never generated a profit.
Continued pessimism and data around the interest in plant-based meat probably had Beyond Meat's stock in the tank in December, and throughout 2024. Even with growth stocks soaring, the hype around Beyond Meat stock has finally run out. It's now heavily shorted, with an estimated short interest of close to 50% as of this writing.
Should you buy Beyond Meat stock?
Contrarians might think it smart to buy some shares of Beyond Meat stock right now. It's a leading brand in its space and has a market cap of just $250 million. However, in this case, it's hard to see how a turnaround happens for Beyond Meat. The company has never earned a profit, is barely growing, and has a weak gross margin of just 17.7%. Even though it has greatly cut its operating costs to try to save money, free cash flow is still negative-$100 million each year.
Stay far away from Beyond Meat stock. If it can never generate a profit, it will never generate any value for shareholders and the stock will keep heading lower and lower.
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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Beyond Meat. The Motley Fool has a disclosure policy.
