If any initial public offering has gone from hot to overheated, Beyond Meat Inc. (NASDAQ: BYND) would certainly fit that description. The shares of the meat alternative food-maker have risen exponentially, defying analysts and investors who have tried to use conventional valuation metrics to create a reasonable price target. While the company raised its revenue guidance, the way it is handling its secondary offering is nothing short of egregious.

Beyond Meat is selling 3.25 million shares in an underwritten public secondary offering. The problem here is that 3 million shares of the common stock offering are being sold by stockholders. The company itself is selling only 250,000 shares. Moreover, it is the selling stockholders who will be granting the underwriters a 30-day option to purchase up to an additional 487,500 shares at the public offering price.

Beyond Meat already has raised capital at the IPO, and the market’s untamed reaction told the company that it was far too conservative on its IPO pricing. So for management and insiders to unload shares after a monster run, and including only a token offering for the company’s own benefit, that may feel like a slap in the face to some of its more recent investors.

The company said that intends to use the limited proceeds heading to it from this offering to continue increasing its production and supply capabilities, to pay for marketing and promotional activities, and for general working capital purposes.

CEO Ethan Brown is planning to sell 39,121 shares, and venture firms like Kleiner Perkins Caufield & Byers and Obvious Ventures are selling more than 950,000 shares combined. Of the 16 officers and directors selling shares, the prospectus indicates they will sell 183,472 shares, for somewhere around $35 million, based on the share price. Other sellers are affiliated with or entities of Bill Gates, Morgan Creek Partners, Bunge, Mitsui, General Mills and many more.

What makes this offering egregious is not that the company is making it. Beyond Meat would have been smart to raise follow-on cash after an exponential run. After all, the IPO price of $25 was for just 9.625 million shares back on May 2, 2019. So in less than three months of being public, the company is letting existing shareholders sell a portion of their shares and it is only going to pick up $50 million or so while insiders are cashing out in close to a $650 million offering, and it is the insiders that will get to sell more shares if the overallotment option is exercised.

Given its $12 billion market cap today, analysts were estimating that 2019 revenues would be about $227 million and 2020 revenues would be about $362 million. Does it seem unrealistic to think that the insiders getting to exit very early (potentially 90 days from the IPO) and that the company’s underpriced IPO will add only about $50 million to help the company build for its future?

Goldman Sachs, JPMorgan and Credit Suisse are listed as the lead book-running managers for the offering. Merrill Lynch and Jefferies are acting as book-running managers, and William Blair and Raymond James are acting as co-managers for the offering.

Shares of Beyond Meat traded down almost 10% at $199.75 after an hour of trading Tuesday, but the shares opened down at $186.34, after closing at $222.13. Its post-IPO range is $45.00 to $239.71.

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