The tailwinds of the pandemic are gone. Multiple rounds of stimulus payments have run their course, and now persistently high inflation is eating away at household budgets. Interest rates have rapidly risen, and the odds of a recession in 2023 are uncomfortably high.

This economic environment is going to make it very clear which companies have sustainable business models that can weather a fierce storm, and which were propped up by those pandemic tailwinds and now face a reckoning. Beyond Meat (BYND -2.35%) and fuboTV (FUBO -1.67%) appear to be in the latter category, and investors would be wise to keep their distance in the new year.

Beyond Meat

Consumers are turning away from expensive fake meat products, and it's not just because of inflation. A recent survey from Deloitte paints a not-so-pretty picture for the industry. High prices are certainly a problem, with the percentage of consumers willing to pay a premium for plant-based meat in decline. But there are more existential issues.

Among consumers who sometimes buy plant-based meat, the percentage of those who view it as healthier and more environmentally sustainable than real meat dropped this year. Perception is much more negative among consumers who do not normally buy the products. Deloitte also found that among those looking to reduce red meat consumption who weren't currently buying plant-based meat, many had no interest in the ultra-processed alternative.

None of this is good news for Beyond Meat. The company's growth story hinges on the idea that consumers will increasingly replace real meat with plant-based alternatives over time. While the situation could change down the road, right now consumer adoption appears to be hitting a brick wall.

Either plant-based meat is a fad that has already peaked, in which case Beyond Meat is in big trouble, or it eventually stages a comeback, perhaps driven by more appealing products in the future. The problem is that Beyond Meat needs to survive until that latter scenario plays out. Looking at the company's recent results, time is not its friend.

Beyond Meat is currently operating with a negative gross margin, which means it costs the company more to produce each pound of its pea-based product than it can sell it for. Even backing out underutilization fees and termination costs, gross margin is still negative. Factoring in all other costs, Beyond Meat reported a net loss of $101.7 million on $82.5 million in revenue during the third quarter. That's...not good.

Cash is flying out the door. Through the first nine months of 2022, free cash flow was a loss of roughly $330 million. Beyond Meat had $390 million of cash at the beginning of October paired with $1.1 billion in debt. Cost-cutting can help, but it won't fix the demand problem.

2022 was a rough year for Beyond Meat, but it's looking like 2023 could be even worse. There doesn't seem to be a plausible investment thesis anymore, so it's best to stay far away from the stock.


A recent cyberattack that knocked out World Cup coverage is the least of fuboTV's problems. The sports-centric streamer is playing a game that it almost certainly can't win: Snag as many subscribers as possible, no matter the cost, and figure out that whole profit thing later.

fuboTV makes money in two ways: Subscription fees and advertising. The company now has over 1.2 million subscribers in North America, along with more than 350,000 subscribers in other parts of the world. Revenue should come close to $1 billion this year, with the bulk coming from subscriptions.

Those subscription fees are lucrative in North America, totaling $64.15 per subscriber per month in the third quarter. Another $7.37 per subscriber was tacked on in the form of advertising revenue. That sounds great, but there's a problem: fuboTV's costs are out of control. Subscription-related expenses, which are primarily content costs, were greater than subscription revenue in the third quarter.

Winning more subscribers isn't going to fix this because fuboTV's content costs are generally incurred on a per-subscriber basis. Trying to cut content costs will likely drive subscribers away, reducing not only subscription revenue but also advertising revenue. While advertising could theoretically generate enough revenue to cover the rest of the company's costs, it's nowhere close to doing that today. fuboTV posted a net loss of $153 million in the third quarter on revenue of $225 million.

I'm just not seeing how the math is supposed to work here. The stock market seems to agree with that assessment, delivering a bruising 88% decline for the stock from its 52-week high. Given fuboTV's gigantic losses and seemingly nonexistent path to profitability, the stock's fall from grace may just be getting started.