What happened

Shares of Beyond Meat (BYND 1.56%), the leading maker of plant-based meat substitutes, gained 10.4% in May, according to data from S&P Global Market Intelligence. Shares were down until the last week of the month, when an upgrade by a Wall Street analyst and presumably some buying from the Reddit meme-stock crowd sent shares surging.

For context, in May, the S&P 500 index returned 0.7%.

Thanks to last month's rise, in 2021, shares of Beyond Meat (which held its initial public offering in May 2019) are now slightly outperforming the broader market. They're up 16% through June 4, versus the S&P 500's 13.4% return. (A stock chart follows below.)

Two Beyond Burgers with cheese, a white sauce, greens, and onions in buns.

Image source: Getty Images.

So what

Beyond Meat stock started May off on a weak note. Following the company's May 6 release of its first-quarter results, shares fell 7% the next day. This decline is attributable to both revenue and earnings missing Wall Street's consensus estimates.

In the first quarter, revenue rose 11% year over year to $108.2 million, falling short of the $113.8 million analysts had expected. Adjusted for one-time items, net loss was $26.2 million, or $0.42 per share, down from net income of $3.0 million, or $0.05 per share, in the year-ago period. The adjusted net loss per share was more than double the $0.19 the Street has been projecting.

In the earnings release, the company commented on the continuing dynamic behind its tepid overall sales growth:

Due to the COVID-19 pandemic, the company continues to experience significantly reduced demand in its food-service channel as decreased foot traffic, streamlined menu offerings, and restrictions on food-service locations' operating capacity have resulted in closures or meaningfully curtailed operations of many of the company's food-service customers. At the same time, the surge in demand from retail customers that characterized the early stages of the pandemic as consumers abruptly shifted toward more at-home consumption has moderated.  

Putting numbers next to the above statement: U.S. and international year-over-year retail sales rose 28% and 189%, respectively, while U.S. and international food service sales dropped 26% and 44%, respectively.

Beyond Meat stock came roaring back in the last month of May when it gained 36.4%, while the market was up just about 1.2% over this period.

On May 24, shares popped 10% following a Wall Street analyst upgrade. Bernstein analyst Alexia Howard hiked her rating on Beyond Meat stock from underperform to outperform, as she opined the company -- and its stock -- will benefit as the food service industry further recovers from the downturn caused by the pandemic. She assigned the stock a price target of $130, which was about 22% higher than it closed on the prior market day. (The current share price is $145.55, as of Friday, June 4.)

The stock continued its upward climb during the week of May 24 with single-digit gains for the next three days and then it closed the week -- and month -- out with a bang by rising 12.5% on Friday, May 28. "The surge is likely the result of some commentary from CNBC's Jim Cramer. On his Mad Money show Wednesday night, Cramer said the [Reddit] WallStreetBets crowd should make Beyond Meat the next meme stock to drive a short squeeze," my colleague Howard Smith wrote. I agree with that take.

BYND Chart

Data by YCharts.

Now what

For the second quarter, Beyond Meat management guided for revenue in the range of $135 million to $150 million, which represents growth of 19% to 32% year over year. The company didn't provide an earnings outlook.

Going into the first quarter report, Wall Street had been modeling for second quarter revenue of $143.5 million. So, the company's guidance was in line with analyst expectations, as the midpoint of its guidance was slightly higher than the consensus estimate.

The pandemic has made it challenging for investors to determine how well Beyond Meat's business is actually performing. Investors should get a clearer view over the next few months, assuming the pandemic continues to subside in the United States and some of the company's other geographic markets.