Shares for Beyond Meat took quite the spill on Tuesday after JP Morgan Chase analyst Ken Goldman slashed his rating for the alternative meat company from Neutral to Overweight. He cites concern over the stock’s inflated price as his reasoning. He does maintain, however, that the price target of $120 per share is still very good, even though it represents a 28.6 decline from the closing price on Monday.
Of course, Beyond Meat is one of only a very few IPOs that can handle a share price cut of nearly 30 percent as it had been quite the darling at its launch. Since its initial public offering, last month, BYND’s (ticker symbol) stock has run upwards of 572 percent. But nothing this good can last, and the skyrocketing value has had a few investors concerned.
And with the Chase downgrade, Beyond Meat’s stock shed more than 12 percent, around market open on Tuesday.
To be more specific, the plant-based meat company opened its initial public offering on May 2 and since that time, share price has soared. At one point, value ballooned nearly seven times its original price of $25. Even as recently as this Monday, the stock price at close of day was just north of $168, still higher than the price target every major Wall Street analyst had expected.
Last week, though, Beyond Meat reported first-quarter sales numbers, showing that they did, in fact, exceed consensus analyst estimates. This means, of course, they delivered far better full-year revenue guidance than they had expected. And that, in turn, sent the stock even further upward. The company now says it expects to reach a break-even point on EBITDA for the full year, even as Wall Street expects the company will post losses.
The negative reaction seen this week, though, is nothing new. Not every investor has been gung-ho about Beyond Meat from the beginning. While it is certainly easy to praise the company for entering the market at the right time—in terms of viability—short sellers continue to bet that the meteoric rise is not sustainable and share price will certainly fall back to a reasonable level. And they maintain their stance even as they lost $400 million waiting for Beyond Meat’s stock to peak and fall again instead of surge, as it did.
This will certainly be a stock to watch over the next few weeks as it not only represents a remarkable market response but an industry that is poised for growth; if the market can handle it.