Beyond Meat Inc. (NASDAQ: BYND) stock is up 450% this week after huge gyrations up and down. However, what traders should look at is that it is a terrible company with products few people want and terrible financial results that go back years. While the stock may rise, its prospects never will. People don’t want “meatless meat.”
Last week, holders of its stock watched an event that could cause massive dilution. A block of debt due in 2027 was pushed out until 2030. The net of the deal was worth $202.5 million. Bondholders will receive up to 325 million shares of its common stock. “The early tender results of its previously announced exchange offer to exchange any and all of its 0% Convertible Senior Notes due 2027, for a pro rata portion of up to $202.5 million in aggregate principal amount of its new 7.00% Convertible Senior Secured Second Lien PIK Toggle Notes due 2030 and up to 326,190,370 shares of its common stock,” Beyond Meat announced. It is fair to say many shareholders will not entirely understand an immensely complex transaction.
After that announcement, the stock promptly dropped from $2.28 to $0.50 a share. It then climbed as high as $7.69. Part of the run was apparently because it made a deal with Walmart to have its products in 2,000 stores. Of course, that does not mean anyone will buy it.
Beyond Meat’s revenue dropped to $75 million in the most recently reported quarter from $93 million in the same quarter a year ago. It lost $35 million.
The value proposition when Beyond Meat went public on May 2, 1999, was that people would buy meat made from vegetables instead of traditional meat from beef cattle. In reality, Beyond Meat products were expensive. With a long list of ingredients, it was heavily processed. People ended up puzzled about the ingredients. In theory, it was healthier than traditional meat. However, very few people wanted anything beyond the real deal.
Beyond Meat has not done a single thing to show any new appeal for its products. Arranging new financing will not change that. The stock may rise and fall, but that reality will catch up to the share price.
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