How to Invest in Impossible Foods

Impossible Foods is on a mission: The company wants to transform the global food industry by making sustainable meat, fish, and dairy alternatives from plants.

Food is a $1.4 trillion global industry. Because of its massive size, it's using significant natural resources. Animal meat production uses almost half the world's land and consumes almost a quarter of its fresh water while contributing roughly 15% of global greenhouse gas emissions.

Impossible Foods wants to change this equation by getting more people to shift their diets from animal- to plant-based protein. It has a huge growth runway, considering global plant-based protein sales were only about $7 billion in 2022.

That massive market opportunity has many investors eagerly anticipating its initial public offering (IPO). You might also be a fan of its products and want to invest in a company you believe could be a big winner. Here's a guide to everything you need to know about how to invest in Impossible Foods ahead of its eventual IPO.

Is it publicly traded?

Is Impossible Foods publicly traded?

Impossible Foods isn't a publicly traded company as of late 2023. It is a private company, held by a small group of investors.

Will they IPO?

When will Impossible Foods IPO?

Impossible Foods doesn't have an IPO on the calendar as of late 2023. Earlier in the year, Impossible Foods CEO Peter McGuinness told Yahoo! Finance that while an IPO "will happen" eventually, it probably wouldn't occur in 2023. An IPO could come in 2024 or 2025, depending on when market conditions improve.

How to invest

How to buy Impossible Foods stock

You can't yet buy shares of Impossible Foods in a brokerage account because it's not a publicly traded company. However, accredited investors (i.e., high-net-worth individuals or those with high incomes) can sometimes buy pre-IPO shares of companies like Impossible Foods on secondary platforms like Equity Bee or Forge Global.

Unaccredited investors must wait for the company's IPO to buy shares. In the meantime, they can consider alternative food stocks. Here are three top Impossible Foods alternatives investors can buy right now:

Beyond Meat

Beyond Meat (BYND 0.95%) is a leading plant-based meat company. It designs products that have the same taste and texture as animal-based meat. The company generated $256.5 million in revenue through the first half of 2023. However, it has yet to turn the corner on profitability. Beyond Meat continues to launch innovative new products as it seeks to grow its revenue and reach.

Oatly

Oatly (OTLY 14.37%) is the world's largest oat milk company. It has developed a portfolio of dairy alternatives, including milks, ice cream, yogurt, cooking creams, spreads, and drinks. The company generated $391.6 million in revenue during the first half of 2023, although it isn't yet profitable. Oatly continues to launch innovative products as it seeks to grow its revenue and eventually start earning consistent profits.

Tyson

Tyson (TSN -0.43%) is one of the world's largest food companies focused on protein. It has a large portfolio of well-known meat product brands, including Tyson, Jimmy Dean, Hillshire Farm, and Ball Park. Tyson also has a plant-based protein brand, Raised & Rooted. In addition, this year Tyson partnered with leading global insect ingredients company Protix to support its global expansion.

People who want to buy one of these Impossible Foods alternatives can purchase shares in any brokerage account. Here's a step-by-step guide to investing in these food stocks.

• Step 1: Open a brokerage account: You'll have to open and fund a brokerage account before buying shares of any company. If you still need to open one, here are some of the best-rated brokers and trading platforms. Take your time researching the brokers to find the best one for you.
• Step 2: Figure out your budget: Before making your first trade, you'll need to determine how much money you want to invest. You'll then want to decide how to allocate that money. The Motley Fool's investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years. You don't have to get there on the first day. For example, if you have $1,000 available to start investing, you might want to begin by allocating that money equally across at least 10 stocks and then grow from there.
• Step 3: Do your research: It's essential to thoroughly research a company before buying its shares. You should learn about how it makes money, its competitors, its balance sheet, and other factors to make sure you have a solid grasp of whether the company can grow value for its shareholders over the long term.
• Step 4: Place an order: Once you've opened and funded a brokerage account, set your investing budget, and researched the stock, it's time to buy shares. The process is relatively straightforward. Go to your brokerage account's order page and fill out all the relevant information, including:
  • The number of shares you want to buy (or the amount you want to invest, to purchase fractional shares).
  • The stock ticker (BYND for Beyond Meat, OTLY for Oatly, or TSN for Tyson).
  • Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at the market price.

Once you complete the order page, click to submit your trade and become a shareholder of one of these Impossible Foods alternatives.

Investors would follow a similar process to buy an IPO stock like Impossible Foods when it goes public. Once shares become available, select Impossible Foods' chosen stock ticker to buy shares through your brokerage account.

Profitability

Is Impossible Foods profitable?

The pre-IPO Impossible Foods doesn't need to publicly disclose its financial results. As a result, there isn't much publicly available data on its revenue or profitability.

Impossible Foods reported that it achieved record sales in 2022, including sales growth of more than 50% in the retail category. Meanwhile, CNBC said the company has "hundreds of millions" in sales.

Impossible Foods likely isn't profitable yet. Larger publicly traded competitors like Beyond Meat and Oatly have yet to turn the corner on profitability. Meanwhile, Impossible Foods cut its workforce by 130 people in 2022 to bring "costs in line with revenue," suggesting it wasn't profitable.

The company would need to be on the road to profitability to make it a compelling investment opportunity when it goes public.

Should I invest?

Should I invest in Impossible Foods?

Impossible Foods is still a private company, so only accredited investors can buy shares. That gives other investors lots of time to do their research to determine if they want to purchase shares when Impossible Foods launches its IPO. Here are some reasons why you might want to buy shares of Impossible Foods:

• You love Impossible Foods' products and want to invest directly in the company that makes them.
• You believe plant-based meat alternatives will capture a larger share of the $1.4 trillion global protein market.
• You like that the company's products can help lower carbon emissions.
• You think Impossible Foods can grow its revenue rapidly and eventually start generating a consistent profit.
• You understand the risks, including that IPO stocks of unprofitable companies can be highly volatile and lose money.

On the other hand, here are some reasons why you might choose not to invest in Impossible Foods stock:

• You don't really like plant-based protein products.
• You prefer rival Beyond Meat's products.
• You think plant-based protein is a fad.
• You don't think Impossible Foods will ever become a profitable business.

ETF options

ETFs with exposure to Impossible Foods

Because Impossible Foods isn't a publicly traded company, you can't get passive exposure through an exchange-traded fund (ETF).

However, investors interested in the company can gain exposure to other food stocks via ETFs focused on the future of food. Here are some of the top options to consider:

• Global X AgTech & Food Innovation ETF (NYSEMKT:KROP): This ETF seeks to invest in companies advancing innovation and technology usage in the agricultural and food sectors, including vertical farming, hydroponics, and protein/dairy alternatives. The ETF held shares of 29 companies in late 2023, including Beyond Meat (4.2% of the fund's holdings) and Oatly (1.8%). It had an ETF expense ratio of 0.5%.
• VegTech Plant-Based Innovation & Climate ETF (EATV 0.06%): This ETF focuses on companies using plant-based ingredients to make animal-free products. The fund held shares of 36 companies in late 2023, including Beyond Meat (0.8% of the fund's holdings) and Oatly (0.4%). The ETF had an expense ratio of 0.75%.
• VanEck Future of Food ETF (NYSEMKT:YUMY): The actively managed fund focuses on companies leading, supplying, disrupting, or benefitting from new environmentally sustainable agricultural and food products. It held shares of 43 companies as of late 2023, including Oatly (1% of the fund's holdings) and Beyond Meat (0.4%). The ETF had an expense ratio of 0.69%.

The bottom line on Impossible Foods

Impossible Foods has a massive opportunity to disrupt the global animal protein market. It could grow its revenue rapidly as it takes market share and launches new products, eventually enabling the company to earn a healthy profit.

However, its public market rivals have struggled to capitalize on the opportunity. Investors need to carefully consider whether they want to invest in Impossible Foods when it goes public in the future.

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