Please ensure Javascript is enabled for purposes of website accessibility

Why Beyond Meat Stock Dropped Today

By Jon Quast – Updated Oct 13, 2020 at 10:49AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An analyst thinks the stock is set to drop much further.

What happened

Shares of Beyond Meat (BYND -3.83%) dropped today after Bernstein analyst Alexia Howard said it will underperform the market and lowered the stock's price target. This reputable analyst's bearish sentiment has retail investors reconsidering their positions, sending shares lower. As of 10:30 a.m. EDT, Beyond Meat stock was down 3%, but had dropped as much as 5% earlier in the day.

So what

Beyond Meat stock has experienced incredible gains in 2020. Even after today's pullback, shares have still gained over 140% so far this year, and over 37% in just the past month. Investors certainly shouldn't expect any stock to post monthly double-digit stock gains over the long term. This being the case, it's not unreasonable to say Beyond Meat stock will struggle to beat the market in the near term.

A woman holds a hamburger made with Beyond Meat product.

Image source: Beyond Meat.

However, Howard doesn't just think Beyond Meat stock will fail to beat the market. Howard went a step further by setting a $136 per share price target on Beyond Meat stock. Even after today's pullback, that's meaningful downside.

Now what

So could Beyond Meat stock really plummet to $136 per share in the near term? It's entirely possible. But price targets shouldn't be a core part of an investing thesis. Buying stocks makes investors part owners of a business, so tracking fundamental business results are more important. This year, Beyond Meat has signed on new distribution partners and launched new products, all of which weren't factored into the company's full-year 2020 guidance. In short, the business is doing well, likely better than its management forecasted at the beginning of the year. 

When a business is doing well, it's often best to keep holding. Stocks are volatile -- they swing up and down in the short term. Timing those swings accurately and consistently isn't easy, and can lead to big losses if investors get it wrong. That's why it's best to stay the course with top growth stocks, ignoring the volatility Beyond Meat is experiencing today.

Jon Quast owns shares of Beyond Meat, Inc. The Motley Fool owns shares of and recommends Beyond Meat, Inc. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.