Beyond Meat Earnings Are Beyond Analyst Expectations

Photo Credit: JUSTIN LANE/EPA-EFE/Shutterstock
June 7, 2019

By Rebecca Heilweil

After releasing its first earnings report since its initial public offering earlier this year, the plant-based meat company Beyond Meat has seen its share prices soar.

In the early morning trading hours on Friday, the share was already up more than 30 percent. The company’s share price, which was set at $25 at its offering, has now skyrocketed to nearly $140 by the end of trading.

The company has kept its place as the most successful public offering of 2019 thus far.

Analysts had estimated that Beyond Meat would earn about $205 million in revenues this year, but the company thinks it will beat expectations and churn out $210 million or more in revenues in 2019.

Last year, revenues were $88 million, signaling enormous growth.

Meanwhile, the company’s net losses also grew to $6.6 million, compared to $5.7 at the same time last year.

“I think what is happening right now is that there’s a bit of a cannabis-esque stock-type response in the public markets to these types of companies, such as Beyond Meat, where we’re realizing that this could be a huge, new sector to invest in,” John Meyer, a managing partner at Transpire Ventures, told Cheddar. “I’d say it is somewhat of a surprise, but not some massive unexpected situation here.”

But there is reason to be skeptical of the company’s growth, given its size when compared to other public companies.

“It’s a small company. In 2018, it had $89 million of revenues, which for the public market scale, is substantially smaller than the other names you’re seeing. When you’re that small, it’s easier to double and triple revenue than when you have billions of dollars in revenue. The law of large numbers starts to catch up with you,” Kamran Ansari, a venture partner at Greycroft, told Cheddar.

Beyond Meat is also reaping the benefits of being the first company in the plant-based food and drink industry to go public. But many private companies ー most notably, plant-based meat competitor Impossible Foods ー are waiting in the wings.

“Many of these larger players are actually investors in some of these more sustainable meat startups, and even sustainable alcohol startups like Endless West,” said Meyer. “This is one of the biggest risk factors to a company like Beyond Meat, simply because they are extremely small.” Meanwhile, other major food brands, including Tyson and Nestle, are hatching their own plans for plant-based meat substitutes.

That incoming competition, Meyer says, could mean that shares in Beyond Meat lose value as those hoping to invest in the plant-based industry more broadly are able to consider other options.

One major challenge in the plant-based meat market is maintaining a reliable supply chain while accelerating growth. Impossible Foods, which has focused on introducing plant-based meats into restaurants, has struggled to meet demands, leaving many chains temporarily without supply.

“Any other sustainable meat or alcohol company going public needs to have enough evidence to show that they’re not going to struggle on supply chain when the biggest way to grow these companies when they go public is to be cutting deals with grocery stores, fast food companies, and other restaurant chains,” said Meyer.

Beyond Meat has thus far benefited from the supply chain challenges of Impossible Burger, scooping up new customers as its still-private competitor struggles to deliver.

“Your competitor’s misfortune is your opportunity, and that’s what they’ve done here at Beyond Meat,” commented Ansari.

"If you look at some of the other large companies getting in, they'll probably do a good job, but we don't think about that. What we think about is ... How can we innovate so quickly that what the consumer is buying today, we are going to delight them with what we replace it with a year from now? If we keep that mentality that got us here going, I think it's going to be hard to catch us," Beyond Meat CEO and co-founder Ethan Brown told Cheddar last month.