Please ensure Javascript is enabled for purposes of website accessibility

Why Beyond Meat Stock Popped 163% at Its IPO

By Rich Smith – May 2, 2019 at 6:04PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Put a pin in it. Beyond Meat's IPO is finally done.

What happened

Shares of new IPO Beyond Meat (BYND -0.86%) began trading today at an offer price of $25 a share -- and immediately doubled. Then it came close to doubling again, eventually ending the day at $65.75 per share, up 163% in a single day. Why?

So what

Honestly, this looks like a story of momentum trading, plain and simple. Beyond Meat stock is one of the first "fake meat" companies to come to market. (There's also Boca Burger, of course, but that one's submerged within Kraft Foods.) Beyond Meat also has good name recognition. Consumer Reports gave it a pretty positive write-up just a few years ago, and the company has enjoyed rapid sales growth since, growing its revenues 170% in 2018 alone.

A hamburger on a seeded bun with lettuce, onions, tomatoes and cheese.

Image source: Getty Images.

Even investors unlucky enough to not get "in" at the IPO price leapt at the chance to own it, adding more than $20 to the share price within minutes of its beginning trading. That gave rise to momentum of its own, and Beyond Meat stock pretty much spent the rest of the day trading up, up, and away!

Now what

What happens next is anyone's guess. On the one hand, it's hard to defend the stock's valuation. At its closing share price of $65.75, Beyond Meat now sports a $3.8 billion market capitalization, is unprofitable, and selling for an incredible 43 times last year's sales.

On the other hand, Beyond Meat has momentum on its side and a richly valuable stock that it can use as currency to buy out rivals such as Don Lee Farms ("Superfoods Veggie Burgers"), Impossible Foods ("Impossible Burger"), and others, should it so desire, helping to corner the market.

So pull up a chair. This one should be good for "dinner and a show" for stock market investors.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Beyond Meat, Inc. Stock Quote
Beyond Meat, Inc.
$12.72 (-0.86%) $0.11

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.