What happened

Shares of Beyond Meat (BYND -1.46%) were left out of this week's stock market rally. The alternative protein specialist's stock fell 13% through Thursday trading, according to data provided by S&P Global Market Intelligence, compared to a 2.8% spike in the S&P 500. That drop continued a mostly negative trend for shares this year, and the stock is down roughly 50% so far in 2022.

The move lower came as investors grew more concerned about slowing consumer spending ahead of Beyond Meat's upcoming earnings report.

So what

The biggest update on consumer spending patterns came from Walmart (WMT -1.75%), which said on Monday that food price inflation is impacting its shoppers' behavior. People are trading down to less expensive items in many cases, requiring more aggressive markdowns to keep grocery inventory moving. The retailer lowered its 2022 earnings outlook for a second time.

Those developments have investors worried that Beyond Meat will report slowing sales and weaker profits when the company announces its Q2 update on Aug. 4. The company posted a significant loss in Q1, but executives said at the time that they were optimistic about improving demand due to new product releases and higher marketing spending. Consumers might not have been swayed by these moves, though, if inflation pushed them toward cheaper meat products.

In a separate development, McDonald's confirmed on Thursday it had ended testing in select U.S. markets for its McPlant Burger, which uses a Beyond Meat patty. Analysts from JPMorgan and BTIG reported subpar demand for the plant-based burger.

Now what

Watch Beyond Meat's sales trends on Thursday for signs that the company can accelerate demand through new launches and a more aggressive promotion strategy. Wins there might help the business navigate through the current tough spending environment without sacrificing market share.

Yet the short-term prospects for earnings growth is weak, and that factor helps explain why investors are cautious about Beyond Meat's stock today. Until the company can demonstrate a clear path back toward expanding profits, shares might remain volatile.