Shares of Beyond Meat (BYND 0.95%) were sizzling in November as the stock heated up after a long slump.
Investors were encouraged by news of layoffs and further cost cuts in its third-quarter earnings report, and the stock also benefited from the broader market gains, as interest rates appears to have peaked and inflation is slowing.
Though the business is still struggling, shares had fallen far enough earlier that the stock was able to recover by 22% in November, according to data from S&P Global Market Intelligence. The chart tells the tale.
Investors finally cheer Beyond Meat
As the chart shows, Beyond Meat stock soared on Nov. 2, gaining 18.4% after it gave a disappointing preliminary earnings report for its third quarter, but said that it would slash costs again.
The company said it expected revenue of $75 million in the quarter, well below the consensus at $87.9 million at the time, and it expected a negative gross profit of $7 million to $8 million. It also lowered its full-year guidance.
However, the company also said it would reduce its corporate workforce by 19%, cutting 65 jobs. It's also undergoing a review to further reduce operations and prioritize gross margin expansion and cash generation.
The stock got another modest lift when it reported the full third-quarter earnings report on Nov. 8, with revenue down 8.7% to $75.3 million, and a generally accepted accounting principles (GAAP) loss of $70.5 million, or $1.09 per share, which was worse than expectations at an $0.85 per-share loss.
It revised its revenue guidance to $330 million to $340 million, down 19% to 21% and below the consensus at $366 million, and it expects a gross profit of breakeven.
There was little news out over the rest of the month, but the stock got another boost on Nov. 14 as the October inflation report came in cooler than expected, which lowers the chance of interest rates going up further.
Is this a dead cat bounce or something more?
Beyond Meat stock jumped again on Dec. 4 on an apparent short squeeze, with nearly 50% of the stock sold short and trading at high volume. However, there didn't appear to be any fundamental news out about the stock.
Beyond Meat seems to be trying to thread the needle in a highly competitive food industry, where it's seeking a price point that will allow it to turn a profit and still be competitive on price. After four years as a public company, that seems increasingly unlikely to happen, as most consumers who would be customers of the product probably already have tried it.
While it's possible for the business to cut its way to profitability, it's hard to see the company fulfilling its promise of disrupting the food industry at this point. Investors are better off avoiding the stock.
