2023 was a great year for much of the stock market. Not so much for Beyond Meat (BYND 0.95%). The plant-based meat producer is set to finish the year down 29% as nearly everything seems to have gone wrong for the company. Revenue is falling, the company is reporting wide losses, and its dreams of disrupting the massive protein industry seem dashed.
However, according to some metrics, almost any stock can be a buy at the right price, and Beyond Meat appears to be in the bargain bin. Let's take a look at the buy, sell, and hold cases for the stock below.
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Buy Beyond Meat stock
Beyond Meat stock has been battered since its 2019 initial public offering (IPO). Its once-rapid growth has faded, and its business model has been unable to deliver profits in a highly competitive industry.
The company announced layoffs in November, which drove the stock higher, but Beyond Meat is going to need more than cost-cutting to break through and be a winner. The company needs some kind of product or technological breakthrough to regain buzz, convert more customers to its products, and potentially decrease prices.
It's unclear what that might be as companies tend to keep new product launches secretive. However, Beyond Meat has a track record of rolling out new products. A cost-saving innovation would also help the company stay more competitive at the grocery store.
With the stock down 96% from its peak in 2019, there's significant upside potential if the company can take a step in that direction and demonstrate a path to profitability.
Sell Beyond Meat
To see some of the reasons to sell Beyond Meat, you only have to look at the company's most recent results. Revenue fell 9% to $75.3 million in the third quarter, and the company reported a gross loss of $7.3 million, meaning the company was losing money even before factoring in overhead costs like management salaries and research and development.
On a generally accepted accounting principles (GAAP) basis, the company lost $70.5 million in the quarter, and it reported an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $57.5 million.
Beyond Meat's stock has plunged because the company's product-market fit is failing. Consumers are turning away from its product, and it can't make it at a price point where it can turn a profit. In fact, its negative gross profit shows how far the company is from being profitable, and that will only grow more difficult with revenue falling.
Hold Beyond Meat
The Beyond Meat story isn't over, and the business is still in flux. For instance, the company just began a new restructuring attempt, announcing it would cut 19% of its global non-production workforce. It's also reviewing its operations to prioritize gross margin expansion and cash generation, as the company has $218 million in cash on the balance sheet, and its liabilities exceed its assets.
Given the restructuring plan, investors may want to give the effort a few quarters to play out to see whether it can drive a meaningful recovery in the stock. Investors should have a better sense of whether to buy or sell the stock after the impact of the restructuring plan is clear.
What's the verdict?
While Beyond Meat still has the potential to disrupt the protein industry, and it makes sense to wait to see what the results of the restructuring are, Beyond Meat stock's numbers make it look like a sell. It's rare for a company to have a gross loss, and it's even more concerning to have declining revenue at the same time.
The combination of both factors indicates the business is failing, customers aren't interested in the product, and the economics don't work. Beyond Meat stock might look cheap, but investors are best off avoiding the stock in 2024.
