Shares of Beyond Meat (NASDAQ:BYND) rose over 36% today, rising to a market cap of more than $7 billion, after the company reported first-quarter 2019 operating results. Investors were eagerly awaiting the latest update on the company's growth trajectory -- and the animal-free protein pioneer certainly delivered.
Beyond Meat grew total revenue 215% thanks to a massive surge from restaurant distribution channels, which helped to drive gross profit 424% higher. The business achieved a gross margin of 25% in Q1. While investors might think that'll be difficult to keep up, management's expectations for the year ahead prove otherwise.
As of 10:19 a.m. EDT, the stock had settled to a 27.7% gain.
Management issued full-year 2019 guidance calling for revenue of at least $210 million, representing year-over-year growth of over 140%, and neutral adjusted EBITDA. That's pretty impressive considering Beyond Meat pulled in revenue of only $16.2 million in 2016.
While investors are basking in the glory of epic growth, it's worth mentioning that the animal-free protein developer is now worth more than $7 billion. If the business achieves revenue of $210 million this year, then it will be valued at 33 times sales. That's pretty pricey for a food company.
Consider two high-profile, albeit imperfect, comparisons. Tyson Foods trades at 0.8 times sales, while Whole Foods Market was acquired by Amazon at a multiple of 0.85 times sales. As more animal-free protein products arrive on the market, restaurants will have more leverage when negotiating partnerships, which will likely erode Beyond Meat's margins.
Beyond Meat is one of the fastest-growing companies on the public markets right now, but investors might want to consider if the business will be able to grow into and earn its premium before animal-free protein competition heats up. Then again, I said that a few billion dollars ago.