What happened

Nothing hurts worse than betrayal by a friend.

Just a little over a month ago, investment bank JPMorgan helped underwrite Beyond Meat's (BYND 0.42%) amazing, fantabulous, record-breaking IPO. In the weeks since, the banker has faithfully supported its friend. It's worked to keep the momentum going as Beyond Meat shares soared to prices up to six times their IPO price with a series of buy ratings, reiterations, and price target hikes.

But today, all that came to an end, and JPMorgan has downgraded Beyond Meat stock.


Image source: Getty Images.

So what

Who's to blame for this betrayal? How about just plain blaming success itself?

Since going public on May 2, Beyond Meat stock has had a fantastic run. The stock itself validated that run last week when it reported Q1 2019 earnings that showed sales more than doubling in comparison to Q1 2018 levels, gross margins growing, and operating losses shrinking. Beyond Meat's sales forecast for the rest of this year -- $210 million -- even suggested that business was getting better as the year progressed, and sales snowballing to grow even faster.

And yet, at yesterday's closing price of $168.10, Beyond Meat stock had already gained 69% since earnings day, and was selling for well over 85 times trailing sales. As JPMorgan explained in today's downgrade, such a valuation "priced in" a lot of future growth, limiting the stock's potential to keep growing in share price.

Now what

In other words, it's not so much that things are going badly for Beyond Meat -- the contrary is more accurate. It's simply that Beyond Meat shareholders have already been rewarded for the business's success to date -- and indeed, probably for the successes Beyond Meat hopes to enjoy for some years to come.

Given the unlikelihood that the next 12 months will be as rewarding for shareholders as the last month has been, JPMorgan is right to step to the sidelines. It's time to pause for reflection, and wait for reality to catch up with the share price.