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Why Beyond Meat Stock Plunged 43.2% in October

By Steve Symington - Nov 11, 2019 at 3:46PM

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Post-IPO volatility last month left a bad taste in the mouths of investors in the plant-based meat leader.

What happened

Shares of Beyond Meat ( BYND -4.08% ) fell 43.2% in October, according to data from S&P Global Market Intelligence, as investors digested both the plant-based meat leader's third-quarter 2019 results, as well as the expiration of its post-IPO lockup period.

So what

It certainly didn't help that multiple analysts weighed in with tempered appetites for Beyond Meat stock early in the month, including a market perform rating from Wells Fargo on Oct. 14, with a steeply reduced price target from Bernstein a few days later. Both analysts voiced concerns over the stock's valuation and competition for its flagship plant-based imitation meat products.

Shopper's-eye view of a grocery shopping cart at the head of a store aisle.

Image source: Getty Images.

Beyond Meat's drop accelerated on Oct. 29, even after the company posted strong third-quarter 2019 results -- including a 250% increase in revenue to $92 million, and its first-ever quarter of positive net income at $4.1 million, or $0.05 per share -- leaving it comfortable raising its full-year guidance to boot.

But it seemed that the market wanted an even bigger beat-and-raise performance from Beyond Meat. And if that weren't enough, its post-IPO lockup period ended the same day, affording many inside shareholders the opportunity to take profits off the table for the first time.

Now what

To be clear, this kind of volatility is exactly the reason I personally prefer to avoid nibbling on shares of recent IPOs for at least a couple of quarters after they've gone public. Beyond Meat stock is now down around 68% from its all-time high in July -- but it's also still trading well above both its $25 IPO price, and even its first-day close at just shy of $66.

Given its enviable long-term growth prospects, and in light of its recent precipitous decline, I think now might be a great opportunity for patient long-term investors to dig in to determine whether Beyond Meat stock is worthy of a place in their portfolios.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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