What Happened?
Shares of plant-based protein company Beyond Meat (NASDAQ: BYND) fell 14.9% in the afternoon session after the stock's negative momentum continued as the company disclosed significant equity dilution from a debt restructuring and warned of a future impairment charge.
The plant-based meat maker announced the issuance of 316 million new shares against a previous base of 77 million, a move that substantially diluted the value of existing stock. This restructuring prompted Mizuho to lower its price target on the stock to $1.50 from $2.00. Adding to the negative news, Beyond Meat also warned in a filing of a coming “material” non-cash impairment charge related to certain long-lived assets. The company also provided preliminary results for its third quarter, expecting revenue of about $70 million with a gross margin between 10% and 11%.
The shares closed the day at $1.81, down 17.2% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Beyond Meat? Access our full analysis report here.
What Is The Market Telling Us
Beyond Meat’s shares are extremely volatile and have had 62 moves greater than 5% over the last year. But moves this big are rare even for Beyond Meat and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 3 days ago when the stock dropped 17.8% on the news that the company released preliminary third-quarter results that pointed to continued soft demand and warned of a significant future asset writedown. Beyond Meat announced it expected net revenue of approximately $70 million, which was down from $81 million in the same period of the previous year. The company also projected a gross margin between 10% and 11%, which included costs tied to the shutdown of its operations in China. Adding to investor concerns, the company disclosed it would record a "material" non-cash impairment charge. This charge suggested that the value of some of its long-term assets, like factories and equipment, was less than previously recorded on its books. Compounding the negative news, a Mizuho analyst lowered the firm's price target on the stock to $1.50 from $2.00, citing "weak" fundamentals.
Beyond Meat is down 52.7% since the beginning of the year, and at $1.82 per share, it is trading 72.3% below its 52-week high of $6.58 from November 2024. Investors who bought $1,000 worth of Beyond Meat’s shares 5 years ago would now be looking at an investment worth $11.24.
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