Few stocks have enjoyed the type of meteoric success on the public markets like Beyond Meat (NASDAQ:BYND). The company provided the right product (plant-based meat alternatives) for the right audience (vegetarians and those concerned with the environmental effects of modern animal farming) at just the right time (IPOs were booming).

The company's initial shares were valued at $25 apiece, though the first trade was for $46 when the market opened. With the stock priced at $72 per share as of this writing, a $10,000 investment on that first day would be worth $28,800 or $15,650, depending on when you obtained shares.

That's a great return! To put it in perspective, an equal investment in the S&P 500 would be worth about $10,800 today when including dividends. So why is it that all anyone can talk about these days is how much Beyond Meat's stock has cratered?

A pack of Beyond Meat patties on a table with other ingredients

Image source: Beyond Meat

Visualizing the wild ride

To understand why there's all this confusion, it might help to give you a visual. The path of Beyond Meat's stock since going public in May 2019 has been one for the ages.

BYND Chart

Data by YCharts.

In a matter of months, the stock zoomed all the way to almost $240 per share. In other words, that $10,000 was -- at one time -- almost a 10-bagger, worth nearly $100,000. That's an incredible debut performance on the public market for a company already worth over $1 billion.

But then the bottom fell out. It's not even that Beyond Meat performed poorly (we'll get to that below), it's just that expectations got so far ahead of reality that reality eventually reasserted itself. To put it in perspective, when the stock reached its high on July 26, it was trading for 67 times sales. Hormel Foods trades for 2.6 times sales. Even though Hormel isn't growing anywhere near as fast as Beyond Meat, the latter was over 25 times more expensive.

That, more than anything, is why the stock has lost about 70% of its value since that date. For the unfortunate investors who bought at the peak, their $10,000 is worth just $3,000 today.

Beyond Meat continues to perform well

If we take a step back and look at how the company -- and not the stock -- has performed, we can see there's lots to be excited about. Beyond Meat has two main revenue streams:

  • Retail: selling Beyond Meat burgers and other meat alternatives at grocery stores.
  • Restaurants and food service: when companies like McDonald's and Dunkin' Brands sell Beyond Meat products on their respective menus.

As you can see from the chart below, sales in both segments are growing like wildfire.

Chart showing growth by revenue stream at Beyond Meatq

Data source: SEC filings. Chart by author. TTM = Trailing 12 months.

There are two things to note from the chart above. First, those figures for the latest period will grow even more when the company reports fourth-quarter earnings next year. Second, when we combine both streams, revenue has been tripling every year!

An investment takeaway

Despite this torrid growth and market-leading position, investors need to be cautious buying shares of Beyond Meat. There's nothing more important to the health of a long-term investment than a moat. In short, a moat is a sustainable competitive advantage that will keep customers coming back to Beyond Meat over the long run instead of choosing (potentially cheaper or tastier) alternatives.

Impossible Foods has already emerged as a very worthy rival. Larger and deeper-pocketed competitors are coming out with their own plant-based burgers as well. While Beyond Meat clearly has momentum now, it may not have enough differentiation to make it the meat alternative of choice over the long run. As such, investors need to keep a close eye on competition if they put their hard-earned cash into the stock.