Shares of Beyond Meat (BYND -5.80%) weren't very tasty Thursday morning, tumbling as much as 7.9%, briefly notching a new 52-week low. As of 1:35 p.m. ET, the stock was down 7.4%.
The catalyst that sent the maker of plant-based meat substitutes down was a bearish take by a Wall Street analyst.
Canaccord Genuity analyst Bobby Burleson lowered his price target on Beyond Meat stock from $30 to $22 while maintaining a hold rating on the shares. It's worth noting that the new, lower price target still represents potential gains for investors of 38% over the coming year, compared to the stock's closing price on Wednesday.
The analyst made a passing mention of the suspension of Beyond Meat's chief operating officer, but he was primarily concerned with the increasing competition in the space and lower demand for plant-based meats.
The news isn't all bad, however. Just yesterday, Beyond Meat began a long-awaited test in partnership with a major fast-food chain.
Given the state of the economy and the pressure on consumer budgets, the analyst's concerns seem justified here, at least over the short term.
Inflation is still hovering near 40-year highs and consumers confronted with tough decisions at the grocery store will likely choose a lower-priced option. While Beyond Meat has made some headway in achieving price parity for its meat substitutes, in most cases, meat is still cheaper. Furthermore, vegetarians and those who really want a non-meat option might be bargain shopping as well, which is where the rising competition comes in.
Until inflation abates and the economy improves, consumers will continue to rein in spending. This in turn will pressure Beyond Meat for the foreseeable future. That said, the transition to eating more plant-based substitutes is a multiyear process. It might be years before investors know for sure if Beyond Meat can convince the general population to occasionally substitute its products for meat. Until then, Beyond Meat should be an appropriately sized position in the speculative part of your portfolio.