What happened

On Wednesday, for the fourth trading day in a row, shares of plant-based meat producer Beyond Meat (NASDAQ:BYND) declined. After falling nearly 13% in early trading, Beyond Meat shares closed today down more than 7%.

So what

Since topping $140 a week ago, the shares have now lost more than 12% of their value. And that's even without any bad news for Beyond Meat during this past week. In fact, on Tuesday, two separate public-relations releases came out that should have boosted the stock.


Image source: Getty Images.

Jill Schmidt Public Relations cited Nielsen data showing a 224.3% increase in sales of "fresh meat alternatives" in the week ending April 25, versus the year-ago period. And the Plant Based Foods Association and SPINS, a wellness-focused data technology company, said there has been "a continued shift in consumer purchasing toward natural and organic products that enhance health and immunity ... since the beginning of the pandemic."

But despite the above, Beyond Meat stock declined in price, and continued to fall today. 


Now what

Perhaps this all means nothing for investors. After all, Beyond Meat has long been a volatile stock.

But a sharp rise in its meat-alternative sales last quarter (up 142% year over year) didn't translate into any improvement in cash flow for Beyond Meat. Instead, operating cash flow at the company shifted into reverse and, combined with higher capital spending, Beyond Meat ended up burning through more than $30 million during the quarter. Negative free cash flow for the past year, meanwhile, has grown past $85 million, not the best trend for a company trying to sell a niche product during a likely recession.

Growth prospects notwithstanding, perhaps investors are beginning to suspect that Beyond Meat may not be worth the 24 times trailing sales that it's currently selling for.

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.