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Here's Why Beyond Meat Stock Tumbled as Much as 19.9% Today

By Maxx Chatsko - Updated Feb 28, 2020 at 3:49PM

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The animal-free protein company reported full-year 2019 operating results and provided guidance for the year ahead.

What happened

Shares of Beyond Meat (BYND -4.43%) dropped nearly 20% today after the company reported fourth-quarter and full-year 2019 operating results. The animal-free protein developer turned in a solid year of operations and easily topped Wall Street expectations. 

Despite that, analysts appear to be disappointed by full-year 2020 guidance. Beyond Meat expects another strong year of revenue growth, but also forecast higher operating losses in the beginning of 2020 as investments in marketing, manufacturing, and research and development ramp up.

As of 11:55 a.m. EST, the growth stock had settled to a 16.2% loss.

A chart on a chalkboard showing a steady ascent and then a sudden decline.

Image source: Getty Images.

So what

Beyond Meat generated one-third of its total annual revenue in the fourth quarter of 2019. The business reported full-year 2019 revenue of $297.9 million, marking year-over-year growth of 238%. 

The company's initial full-year 2020 revenue guidance calls for $490 million to $510 million in sales, which would represent year-over-year growth of 65%. The midpoint of $500 million tops the average analyst expectation of $498 million, according to numbers compiled by Yahoo! Finance. 

Now what

While analysts and investors might be nervous about plans to invest heavily in growth, those concerns might be a little overblown. Beyond Meat ended 2019 with $276 million in cash and reported an operating loss of only $0.5 million for the year. If the business can keep operating expenses and operating losses in check relative to gross profits, then the growth will be achieved in a responsible manner. 

Whether the forward price-to-sales ratio of 13 is considered reasonable for a food company is another discussion. Then again, at some point in the growth trajectory investors may need to give Beyond Meat the benefit of the doubt, especially if profitable growth becomes the norm.

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