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Beyond Meat IPO: 5 Things Investors Need to Know

By Eric Volkman – Updated Apr 30, 2019 at 1:40PM

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As yet another high buzz start-up prepares to debut on the public markets, here's what investors should know before digging in.

It's put up or shut up time for well-known, plant-based food producer Beyond Meat. The company is in the middle of its initial public offering, and soon, shares of "BYND" will start trading on the stock market.

We've previously covered the basics of Beyond Meat's IPO. Here, we'll cover additional details that anyone watching this hot start-up will want to know.

A Beyond Beef promo, showing meatball substitute and a wooden spoon in a pan.

Image source: Beyond Meat.

Foreign revenue is rising sharply, but ...

It's no surprise that Beyond Meat -- an early-ish stage company that's created a lot of consumer buzz -- has managed impressive revenue growth over its short life span. A slightly less known dynamic is that its international sales are also growing at a torrid pace.

Granted, this is from a small base, and the overwhelming majority of its sales are domestic. Still, sales abroad saw a far higher leap from 2017 to 2018 than overall gross revenue, growing from just 1% to 7% of the top line during that period. Foreign markets clearly present a big opportunity for the company.

... it's not yet profitable

Another not-so-shocking development is that Beyond Meat hasn't yet crossed into the black on its bottom line. The company's costs of goods sold continue to exceed its revenue as management "invested in innovation and growth of our business." 

In its latest IPO prospectus filing with the SEC, Beyond Meat didn't give any estimate of when it would reach breakeven or start to turn a profit.

Whole Foods and other giants remain loyal customers

Beyond Meat is fortunate to have Whole Foods Market, these days a subsidiary of Amazon, as a steady customer. Whole Foods was the first grocery chain to begin selling its flagship Beyond Meat product, and that relationship has been maintained through Amazon's acquisition of the supermarket chain

Whole Foods isn't the only big-name grocer stocking Beyond Meat products. The company also lists as clients Safeway, Kroger, and Albertsons, among other retailers.

A love for research

Since Beyond Meat would like to win over carnivores, in addition to vegetarian and vegan consumers, the company aims to replicate the taste of popular meats as closely as possible. To do this, it's enlisted a platoon of scientists to approximate not only the taste but also the "sense" of meat.

Beyond Meat doesn't skimp on this brainy workforce. Last year, it devoted $9.6 million to research and development -- more than 10% of what it generated in revenue. Expect even more spending in the future -- $50 to $60 million of the IPO proceeds will go to R&D and sales and marketing. The IPO prospectus also reveals that Beyond Meat has numerous products in its pipeline, and it aims to roll out at least one new offering every year.

Top target for future growth: restaurants

The U.S. is the land of the restaurant chain, and Beyond Meat continues to push into this segment.

Those efforts began in earnest in 2017 with the introduction of the Beyond Burger, and expansion has been fast. According to the company, its menu items are now sold in roughly 12,000 restaurants and other eateries in North America. Famous names in this space include Carl's Jr., Del Taco, and TGI Fridays.

You won't necessarily have to locate a Carl's Jr. or a Del Taco to find Beyond Meat offerings. The company pledges to "aggressively" add to that list of partnerships as Beyond Meat has "received significant interest from other new potential partners and [is] expecting to launch at several prominent restaurant chains in 2019."

Beyond Meat expects its stock to price between $19 and $21 per share. At the middle of that range, the company would enjoy a valuation of nearly $1.2 billion. Stay tuned for this unicorn to begin trading.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.

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