Beyond Meat (BYND +11.35%) was an early leader in the meat alternative food niche. There was immense excitement around its products and its stock. Today, however, the shares are stuck in the realm of penny stocks. Is this the kind of stock that an investor should buy and hold for the long term in the hope of a resurgence, or is it a stock that is best avoided?
What does Beyond Meat do?
At its core, Beyond Meat is a consumer staples company focused on making pre-packaged foods. It competes with industry giants, such as General Mills and Mondelez. Beyond Meat doesn't have the same scale as big companies like these. It doesn't have the same marketing budget or skill. It lacks the same manufacturing and distribution capabilities. It is at a distinct disadvantage in what is a very competitive industry.
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That said, Beyond Meat is highly focused on meat alternatives. It's essentially an industry upstart attempting to break into the packaged food business with a new product. This occurs frequently in the consumer products sector, which is heavily brand-driven. Initially, it appeared that Beyond Meat's products were poised for success.
That said, there were other competitors in the meat alternative space. The barriers to entry for competing products are also relatively low, with innovation being a key attribute for most large food producers. Still, Beyond Meat seemed to capture the attention of consumers, and early demand was brisk. If that's what you remember about Beyond Meat, you might be tempted to buy it today in the hope that it can regain the level of consumer excitement it once had.
Business has not gone well for Beyond Meat
Beyond Meat had a few good years leading up to its initial public offering (IPO). In its first full year as a public company in 2019, sales in its consumer segment rose 185%, with sales in the food service segment up an even more impressive 312%. That was pretty much the high-water mark for the business, as cracks started to show shortly thereafter.
Sales rose, but underlying results were mixed in 2020, with foodservice sales falling domestically and internationally. In 2021, U.S. retail sales were a trouble spot despite strength in the foodservice segment and internationally. And in 2022, the company's overall sales rose just 0.4%, with the positives and negatives largely offsetting each other.
NASDAQ: BYND
Key Data Points
The bottom fell out in 2023, with sales down by a huge 18%. That was followed by a sales decline of nearly 5% in 2024, with volumes down in every division. Business didn't improve in 2025, with sales down 14.4% through the first nine months of the year. Volumes fell across every division.
The fundamental weakness of the business is one of the primary reasons the company has fallen into penny stock land. The other big reason is that Beyond Meat has yet to turn a full-year profit. It's essentially a money-losing start-up with a struggling core business. All but the most aggressive investors should probably steer clear of Beyond Meat.
The risk versus reward balance is badly skewed
It's entirely possible that Beyond Meat will manage to regain its early momentum. Consumers have recently been leaning toward healthier foods, and non-meat products could be viewed as falling into that category. However, it seems as if a quick turnaround in the highly competitive packaged food industry is unlikely for struggling Beyond Meat.
If you're a long-term investor, buying shares of this company is a high-risk decision with a high likelihood of ending poorly unless a larger competitor swoops in to buy the brand.
