Is Beyond Meat (BYND 0.95%) a future feast or a financial famine? Once celebrated as a trailblazer in the plant-based meat revolution, the company has seen its share price shrivel by over 95% since 2021, a blaring distress signal in a young and volatile industry.

Digging through Beyond Meat's financials and ongoing attempts to transform the global food landscape reveals a business with deep-seated issues -- from dwindling sales to persistent profitability challenges -- that keep this stock off my shopping list.

Beyond Meat has yet to solve the profitability puzzle

The latest financial statements reveal a troubling scene: A gross profit margin in the red at negative 9.6%, signifying that the company's costs are swallowing its revenues whole. Gross profit margin delivers a critical health check, revealing the portion of each revenue dollar that remains after deducting the cost of goods sold. Beyond Meat's negative margin indicates that it's selling products without covering the fundamental costs of production, a path that no business can sustain.

In the quest for profitability, Beyond Meat cut its global nonproduction workforce by 19% recently. Top brass, CEO Ethan Brown and CFO Lubi Kutua, haven't shied away from discussing these turbulent times and the measures they're taking to steady the ship during quarterly earnings calls. Yet, a gross loss and an adjusted EBITDA loss of $57.5 million in the most recent quarter show that the journey to profitability will be a hard one.

This ongoing struggle brings into question the entire business model. Steady losses have reduced the company's cash balance from over $1.1 billion in early 2021 to only $217.5 million. Until Beyond Meat can chart a course to positive margins and sustain them, its long-term prospects remain fraught with uncertainty.

Beyond Meat faces diminishing domestic growth

The landscape of plant-based foods is a fast-changing one with consumer tastes and competition creating complex market dynamics. Demand in the United States continues to shrink, to the tune of a 24.0% year-over-year decline in product volume sold in the third quarter. That correlated to domestic revenue falling 30.8% as well.

With U.S. revenue making up 60% of Beyond Meat's top line through the first three quarters of 2023, the recent weakness offers the clearest indicator yet of dwindling demand for plant-based meat from U.S. consumers. That said, strength outside the U.S. managed to offset some of the domestic losses. International volumes and revenue climbed 68.8% and 58.7%, respectively, during the third quarter.

The plant-based meat market is evolving

The food industry at large regularly experiences rapid shifts in consumer preferences and intense competition with the small plant-based meat niche being especially vulnerable to these changes. Reports from CoBank and Circana reinforce the takeaways from Beyond Meat's latest results. Circana noted that plant-based meat alternatives experienced a 21% year-over-year decline in trailing-52-week sales as of July 2, 2023, indicating a major shift in consumer tastes.

The CoBank report also called out severe limitations to scalability and challenges to potential growth. The report found plant-based consumers in the U.S. tend to come from higher-income households, a smaller target market. At the same time, they appear to doubt the healthiness of plant-based meat alternatives and have expressed concerns over the highly processed nature of these products.

With Beyond Meat reporting declining revenue for six straight quarters, its ability to scale up its operations and drive market penetration, at home or overseas, will suffer.

I'm staying on the sidelines

Beyond Meat's journey presents a buffet of reasons for apprehension. The company's plummeting share price, steady losses, and dwindling U.S. market all warrant a cautious stance.

Successfully navigating the stock market requires a close look at the ingredients that make up a business and its prospects. Given Beyond Meat's current state, I'll be waiting for a significant shift to its financials and market opportunity before even considering a second look at the stock.