What happened
Shares of Beyond Meat (BYND 0.95%), the leading maker of plant-based meat substitutes, dropped 28.2% in February, according to data from S&P Global Market Intelligence. This decline was likely due to a continuation of the stock's downward trend, which stems from a string of weaker-than-expected quarterly reports, and the fourth-quarter 2021 report coming in lighter than many investors were probably anticipating.
Along with company-specific factors, overall market dynamics have also likely weighed on the stock. Starting late last year, many investors began rotating away from highly valued growth stocks due to the expectation of rising interest rates in 2022.
For context, the S&P 500 and Nasdaq indexes fell 3% and 3.4%, respectively, in February.
In 2022, Beyond Meat stock is down 29.7% through March 2, trailing the S&P 500's negative 7.7% return over this period. Last year, the stock lost 47.9% of its value, while the broader market returned 28.7%. In 2020, it surged 65.3%, driven by consumers freezer-loading food during the early stages of the pandemic.
Image source: Beyond Meat.
So what
Last month, Beyond Meat stock was already down by more than 24% (compared to the S&P 500's 5% decline) before the company reported its fourth-quarter 2021 results on Thursday, Feb. 24. This decline is attributable to the reasons previously discussed: a continuation of its downward momentum and market dynamics.
On Feb. 25, shares dropped 9.2% following the report on the prior afternoon. The quarter's revenue and earnings, and 2022 revenue guidance missed Wall Street's expectations.
In the fourth quarter, Beyond Meat's revenue edged down 1.2% year over year to $100.7 million, slightly short of the $101.4 million analysts had projected. Adjusted for one-time items, net loss was $80.4 million, or $1.27 per share, a 274% widening from the net loss of $0.34 per share in the year-ago period. That result missed Wall Street's consensus estimate, which was for an adjusted loss of $0.71 per share.
Because the market looks ahead, 2022 revenue guidance -- which we'll discuss in a moment -- was probably the metric that most disappointed investors.
Now what
For full-year 2022, management guided for sales in the range of $560 million to $620 million, an annual increase of 21% to 33%. Going into the release, Wall Street had been modeling for annual revenue growth of 37%.
The company's performance has been somewhat disappointing for some time, though the pandemic has been a huge factor. But it doesn't seem to be the only reason. Competition has continued to heat up in the plant-based meat category, which investors need to monitor. It remains to be seen the degree to which consumers in this space will be brand loyal.
On a bright note, Beyond Meat is doing a great job this year in significantly expanding partnerships with the big fast-food chains. On Jan. 10, its Beyond Fried Chicken nuggets became available in KFC restaurants across the country. And on Feb. 14, 600 McDonald's locations in the San Francisco Bay and Dallas-Fort Worth areas began offering the plant-based burger, McPlant. Both these menu items are available while supplies last.
