Beyond Meat Stock Is on a Wild Ride. Why a Meme Rally Looks Undercooked.

Mizuho analysts reiterated an Underperform rating on Beyond Meat stock and cut their price target to $1.50 from $2. (Photograph by Drew Angerer/Getty Images)

Key Points

• Beyond Meat’s stock fell 21% to $2.84 on Thursday, after trading as high as $7.69 earlier in the week, with analysts citing weak fundamentals.
• Mizuho analysts cut their price target for Beyond Meat to $1.50 from $2, maintaining an Underperform rating due to declining sales since 2021 and no annual profit.
• Consumer behavior shows 81% identify as “meat eaters,” the largest percentage since 2019, while flexitarians are at 11%, the smallest percentage since 2019.

Beyond Meat has become more than a hot take for retail investors and short sellers chasing the next meme stock. Analysts are also paying attention.

After surging earlier this week, shares ended Thursday’s session down 21% at $2.84. It seems the rally can’t get enough fuel to keep going. Shares traded as high as $7.69 this week before pulling back.

The brutal losses continued Friday, as the stock pared earlier gains and sank 18% to $2.32. The benchmark S&P 500 index was up 1%.

However, hopes that it may become the next mega meme stock may be fading—while volatility is elevated, the company’s fundamentals remain weak, Mizuho analysts wrote Friday.

The firm has rated Beyond Meat Underperform since October 2023, and has also steadily reduced its price target since early 2024. Analysts cut their price target yet again to $1.50, down from $2, on Friday, citing their discounted cash-flow analysis of the company.

Beyond Meat traded below $1 for the first time after sharing the initial results of its debt-swap deal earlier this month. While the agreement stripped out what Mizuho called a “key balance sheet hurdle,” this came at the cost of significant equity dilution.

Weak category and company fundamentals underpin Mizuho’s Underperform rating. Beyond Meat has struggled with falling sales since 2021 after its pandemic-era peak. To date, the company has yet to turn an annual profit.

And the challenges appear to extend to all players in the U.S. meat alternatives category. Volumes have fallen consistently through the four weeks ending Oct. 4, according to Nielsen data.

“Declines remain velocity-driven despite traditional ground beef prices now at a price premium,” analysts wrote. “Consumers’ increasing affinity for protein has enhanced demand for animal meat despite record high prices, and our survey suggests that demand may remain resilient.”

Efforts to turn around the business, if they materialize at all, may take a while. Mizuho, for one, doesn’t anticipate the company to be free-cash-flow positive until the end of 2028.

Before then, Beyond Meat may struggle to get its products in the hands of customers—despite recent efforts to expand its presence in grocery stores across the U.S. Earlier this week, the company announced it was expanding an existing partnership with Walmart and introduced a new partnership with high-end grocer Erewhon.

But that isn’t enough to buck a broader shift in consumer behavior. The Food Industry Association’s annual survey shows 81% of consumers identify as “meat eaters”—the largest percentage since 2019. By comparison, so-called flexitarians (people who primarily follow a vegetarian diet but also consume meat) register at 11%—the smallest percentage since 2019.

“Despite record high prices for traditional beef, consumer sentiment suggests strengthening headwinds for plant meat growth,” Mizuho wrote. “We remain cautious for revenue.”

The outlook isn’t much better across Wall Street. Of five firms polled by FactSet, Mizuho included, five rate Beyond Meat Sell, while three rate the stock Hold. TD Cowen has an 80 cents price target on the shares, representing a Street low.

The company said it expects to book a noncash impairment charge in its fiscal third quarter related to certain “long-lived assets,” though revenue should be in line with the company’s forecasts.

“Although the impairment charge is expected to be material, the Company is not yet able to reasonably quantify the amount at this time,” Beyond Meat said in a Form 8K filed with the Securities and Exchange Commission on Friday.

The company said it anticipates $70 million in revenue, compared with a prior range of $68 million to $73 million. Still, this marks a sharp decrease from the $81 million reported in the same period last year.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com