What Is a Falling Knife?

If you've read or watched enough financial media, you've likely come across the term "falling knife" before. The term falling knife illustrates a certain kind of stock that is best avoided -- using colorful imagery that means what you might think it does.

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Person cutting dollars into pieces with a knife. — Image source: Getty Images.

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Stock

A stock represents an ownership interest in a business. When a business wants to raise money, its board of directors determines the number of shares to issue.

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What Is a Bond Rating?

A bond's rating can say a lot about a particular security and its investment risk level.

What Is Inflation?

Yes, it means rising prices and more, but what causes it, and why is it important to understand?

Why Portfolio Diversification Matters & How to do it

Spreading your money across industries and companies is a smart way to ensure returns.

In the first quarter of 2024, the company reported an 18% decline to $75.6 million and an operating loss of $53.5 million. Those numbers seem to indicate that Beyond Meat is beyond saving. While the stock is arguably beyond its falling knife phase after plunging through 2021 and 2022, it continues to plumb new depths due to the overall weakness in the business.

Despite promises of a turnaround, Beyond Meat shows little sign of any potential for a comeback. It remains a falling knife and offers a good example of the kind of business that can burn investors who try to buy it on the way down.

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About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Beyond Meat. The Motley Fool has a disclosure policy.