Sell Beyond Meat Inc (BYND) Stock: Competition, Valuation Concerns and Hype


Beyond Meat Inc (NASDAQ: BYND) recently went public with a bang — gaining as much as 500%. But investors were warning against the hype around this stock for a long time. It seems the stock has entered the correction territory. Beyond Meat stock that crossed the $200 mark is now trading at $140. But the stock is set to lose more value.

Freedom Finance JSC’s analyst Erlan Abdikarimov, who gave a bearish view for Beyond Meat stock when the company was one fire, thinks that the stock will fall to as much as $51. The analyst recently said that albeit Beyond Meat is a pioneer in the meatless meat industry, there would be a strong competition ahead. He doesn’t see the stock trading above $100 by the next quarter.

Earlier this month, JPMorgan also downgraded Beyond Meat stock to Neutral from Overweight, citing valuation concerns. The firm’s Ken Goldman and James Allen, however, raised their price target for Beyond Meat stock to $121. The analysts also said that the shortening Beyond Meat stock is “risky” and there remains a long-term growth opportunity.

A Very Limited Market

The market in which Beyond Meat Inc (NASDAQ: BYND) is operating remains extremely limited. Irrespective of all the hype, only about 3%-5% of the US population uses strictly vegetarian food. This limited market is also slowly getting saturated amid the entry of big players, like Tyson Foods and Nestle. Nestle launched its meatless burger in Europe last year under its Garden Gourmet brand after striking a partnership with McDonald’s. Tyson Foods also plans to launch plant-based meat substitute this summer.


Lockup Period

Another reason why Beyond Meat is going to further lose its value is the impending expiration of the lockup period. A lot of insiders are going to sell the stock after the expiration of the lockup period in October.

Bernstein’s analyst Alexia Howard on June 12 downgraded Beyond Meat stock, citing valuation problems. Howard said that the stock has a very “limited” upside potential from a valuation perspective. The analyst cut the rating to a market perform from outperform. However, Howard increased the price target to $123 from $107.

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The author does not own any of the stocks discussed in this article.