Please ensure Javascript is enabled for purposes of website accessibility

Why Beyond Meat Stock Dropped Today

By Rich Smith - Updated Mar 16, 2021 at 2:18PM

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

J.P. Morgan doubles down on its sell rating.

What happened

Shares of Beyond Meat (BYND -2.00%) had tumbled 5.1% as of 1:25 p.m. EDT on Tuesday, after J.P. Morgan cut its price target to $91 a share, and reiterated a rating of underweight on the stock.

So what

That $91 price would have sounded like a gift as recently as a year ago, but Beyond Meat shares have more than doubled over the course of the pandemic, and now trade north of $140, up 136% from their year-ago price.

Just yesterday, Jefferies said that it thinks $140 is a fine price for Beyond Meat stock, which it rates a hold. It says Beyond Meat "retains an advantage over other meat-alternative companies, as one of the first-movers in the space."

White arrow declining sharply atop a stock tickertape display bathed in red

Image source: Getty Images.

Now what

I'd focus less on what other investors think (even investment banks), and more on the numbers that Beyond Meat itself reports. And from that perspective, I'm not impressed.

Although sales were up strongly last year, rising 36.6% year over year, Beyond Meat still hasn't figured out how to earn a profit from all its sales success. It lost $53 million last year, its worst earnings year ever, and burned through $115 million in negative free cash flow -- also its worst number ever.

As competition gets stiffer from fellow "new food" companies like Impossible Foods, Tattooed Chef, Soylent, and Huel -- and from traditional food producers offering meatless alternatives -- the time for Beyond Meat to parlay its first-mover advantage into sector-leading profits is running out.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Beyond Meat Stock Quote
Beyond Meat
$26.42 (-2.00%) $0.54
Tattooed Chef, Inc. Stock Quote
Tattooed Chef, Inc.
$6.87 (-6.40%) $0.47

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

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