Beyond Meat (BYND -0.17%), one of the world's largest producers of plant-based meat products, went public at $25 a share in May 2019. Its stock opened at $46 on the first day, soared to an all-time high of $234.90 two months later, and subsequently pulled back to the mid-$30s.

At its peak, Beyond Meat's stock was valued at $14.1 billion, or 47 times the revenue it would generate in 2019. Today, it's worth just $2.2 billion, or four times the revenue it's expected to generate in 2022. Does that lower valuation make it a more compelling investment?

Beyond Beef sliders.

Image source: Beyond Meat.

Why did the bulls abandon Beyond Meat?

Beyond Meat's stock crashed for three simple reasons. First, the company's lack of profit and a frothy price-to-sales ratio made it an easy target for the bears as interest rates rose.

Second, Beyond Meat's growth cooled off after its public debut. Its revenue surged 239% to $298 million in 2019 as more retailers and restaurants agreed to sell its plant-based meat products.

But in 2020, its revenue rose only 37% to $407 million as the pandemic throttled the growth of the food-service division, which generated more than a quarter of its revenue. The growth of its retail division, which sells its products through large retailers such as Walmart, partly offset that slowdown.

In 2021, its revenue increased just 14% to $465 million, dashing hopes for a quick post-lockdown turnaround. It attributed that slowdown to a "temporary disruption" of its retail growth in the U.S., with consumers focusing more on "comfort foods" instead of health-oriented options, and retailers and restaurants canceling trials for its products as the delta variant spread.

Lastly, Beyond Meat remained deeply unprofitable as it faced a growing number of competitors. Its net loss narrowed from $29.9 million in 2018 to $12.4 million in 2019, but then widened to $52.8 million in 2020 and more than tripled to $182.1 million in 2021.

Its largest rival, Impossible Foods, remains private and was valued at $7 billion after its last funding round. As long as Impossible stays private and attracts more funding, it can afford to keep expanding at a loss to further widen its moat against Beyond Meat.

Meatpacking giant Tyson Foods (TSN 0.56%) also started rolling out its own plant-based meat products last year. During its fourth-quarter conference call in February, CEO Ethan Brown admitted that "competitive activity in U.S. retail intensified in 2021, marked by frequent aggressive discounting and new entrants to the category."

2022 could be another challenging year

During that same call, Beyond Meat predicted that its growth would accelerate again in 2022 as it expands its reach with new products, such as Panda Express' Beyond the Original Orange Chicken, Beyond Italian Sausage Crumbles at Yum! Brands' Pizza Hut locations in Canada, Beyond Fried Chicken at Yum!'s KFC locations across the U.S., McPlant burgers at McDonald's, and Beyond Meat Jerky through its Planet Partnership joint venture with PepsiCo. It also planned to continue its expansion across Europe and Asia.

But in the first quarter of 2022, Beyond Meat's revenue grew a mere 1% year over year to $109.5 million as its net loss widened from $27.3 million to $100.5 million. The amount of products sold rose 12% year over year, but those higher shipments were offset by a 10% decline in net revenue per pound -- which it blamed on markdowns and currency headwinds. Once again, Brown said Beyond Meat faces "increased competition" in the plant-based meat market.

Will Beyond Meat's business stabilize?

Beyond Meat's decelerating growth and widening losses raise bright red flags for its business model. It relies heavily on letting restaurants and retailers "sample" its products at steep discounts, but most of its competitors have adopted the same loss-leading tactics. At the same time, its costs are rising amid inflationary and supply-chain headwinds.

However, Beyond Meat still believes it can grow its revenue 21% to 33% for the full year. Analysts expect its revenue to rise 22% to $567 million, but for its net loss to widen again to $279 million. Even on the basis of adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), they expect its net loss to widen from $113 million to $219 million.

It ended the first quarter with just $548 million in cash and equivalents and with a staggering debt-to-equity ratio of 28.1. That low liquidity and high leverage, which mainly comes from $1.13 billion in convertible senior notes due in 2027, will make it tough for the company to secure fresh funds at favorable rates.

It's not the right time to buy Beyond Meat

Beyond Meat's stock looks more reasonably valued than it did in the past, but its future path still remains highly uncertain. Its decelerating growth and ugly balance sheet are likely to keep the bulls away, and it will remain out of favor until it meaningfully stabilizes its business. For now, investors should stick with more resilient packaged-food stocks instead.