Beyond Meat (BYND +41.02%) went from new industry darling to beaten-down stock over the past few years, and its shares are down a staggering 97% from the high they set soon after the 2019 IPO.
The company has been reporting quarter after quarter of declining sales and steep losses, but investors cheered its fourth-quarter earnings report, sending the stock as much as 60% higher. Those gains were short-lived, however, and Beyond Meat is down 25% year to date with a low price-to-sales ratio of 1.2. But even if investors were initially excited about the company's recent progress, there's reason to be concerned about Beyond Meat's future.
Beyond Meat might be losing market share
The meat substitute industry has been growing, and it should continue to do so over the next few years, according to data from Statista.
Image source: Statista.
But Q4 2023 marked Beyond Meat's seventh straight quarter of declining revenue. As its top line shrank 18% to $343.3 million for the year, overall industry sales increased 13%.
Some of the updates from the quarter that investors liked included price increases and new product launches. Management laid out a plan to generate higher profitability, including cutting $70 million from its operating budget. These actions should help the situation.
Buying Beyond Meat stock now is a bet on management's ability to execute its turnaround plan, but success is far from guaranteed. The company's net loss widened from $66.9 million to $155.1 million year over year in the fourth quarter, and it even reported a gross loss with a negative 113.8% gross margin. Excluding non-cash charges, Beyond Meat's gross margin still worsened from the prior-year period.
Management is guiding for revenue of $315 million to $345 million this year, meaning 2024 will likely be yet another year Beyond Meat is left behind by the industry.
