Shares of plant-based meat company Beyond Meat (NASDAQ:BYND) spiked higher on Tuesday morning after the company announced an expanded distribution deal with one of the largest retail chains in the world, Walmart (NYSE:WMT). Previously, the company's products were available at 800 Walmart locations; starting next week, they'll be sold at 2,400 of its stores.
Investors don't care that Beyond Meat stock has already more than doubled year to date. Today they're celebrating this Walmart deal by sending shares even higher. As of 10 a.m. EDT, Beyond Meat stock was up 11% and hitting a new 52-week high.
For companies like Beyond Meat, expanded distribution can immediately boost revenue. Beyond Meat typically recognizes revenue when products are delivered to retail and food-service locations, not when they finally sell through to the end consumer. Therefore, right now it will begin stocking around 1,600 Walmart shelves for the first time, providing immediate new top-line growth.
Considering Beyond Meat stock trades at a pricy 26 times trailing sales, Wall Street is expecting long-term explosive revenue growth from this company. Today, it's cheering because the expanded distribution deal with Walmart confirms this hope.
This Walmart announcement is a big deal, and Beyond Meat shareholders are right to be excited. Long term, distribution deals with retail outlets and food-service chains will need to continue to keep the revenue growth coming. If the company can keep it up, this growth stock can still reward patient investors from here, even after its big gains so far in 2020.