What happened
Beyond Meat (BYND 3.63%) was raked over the coals this week, plunging as much as 24.3%, pushing the stock to the lowest level since its initial public offering in mid-2019. As of 3:02 p.m. ET on Friday, the stock was still down 23.5% for the week.
The catalyst that sent the maker of plant-based meat substitutes cratering was a first-quarter financial report, released last week, that was far worse than investors anticipated.
NASDAQ: BYND
Key Data Points
So what
Beyond Meat reported revenue of $109.5 million, up 1.2% year over year. Things went from bad to worse, as its gross profit margin of 0.2% was far worse than the 30.2% recorded in the prior-year quarter. This resulted in a net loss of $100.5 million, or a loss per share of $1.58.
Image source: Getty Images.
To give these numbers context, analysts' consensus estimates were calling for revenue of $112.4 million and a loss per share of $0.97 -- so it wasn't even close.
Beyond Meat executives suggested the plummeting gross margin was "sizable though temporary," as the company spent heavily on strategic launches, which it called "cost-intensive."
Now what
Investors looking at Beyond Meat's forecast might well have asked, "Where's the beef?" The company is guiding for full-year revenue in a range of $560 million to $620 million, which would represent growth of 27% at the midpoint of its guidance. On a positive note, management maintained its full-year forecast, suggesting the pain might be short-lived. However, the lack of profit guidance has some investors concerned that there could be more suffering in store for the bottom line.
Beyond Meat has been working to bolster its supply chain, ramping up production to handle higher demand. In fact, it's worth noting that the decline in net revenue was actually the result of lower prices. While total volume of products increased 12.4%, it was offset by a 10% decline in the price per pound.
The company wants to close the price gap between meat products and plant-based substitutes, but its eroding margins and lack of profits simply aren't sustainable over the long term. This is certainly something investors should watch in the quarters to come.
