In this file:
· Beyond Meat Bulls Are Undaunted as Bears Pile On After Surge
· This is nut loaf, will Beyond Meat crash?
· The Audacious (and Risky) Strategy That Made Beyond Meat a Billion-Dollar Company
Beyond Meat Bulls Are Undaunted as Bears Pile On After Surge
Shares on track to record after more than tripling post-IPO
Short interest amounts to 44% of free-float, according to S3
By Tatiana Darie, Bloomberg
May 14, 2019
It’s becoming difficult to tell who’s more enthusiastic about faux meat on Wall Street: bulls or bears.
Beyond Meat Inc., the veggie burger maker that has more than tripled since its May 1 debut, rose for a second day on Tuesday, putting it on track for a record-high close. The shares have surged as investors bet that the meat-substitute business is poised for breakout growth, setting suppliers apart from traditional food companies.
At the same time, bearish bets have been piling up fast. About 44% of Beyond Meat shares available for trading are sold short. That puts it among the top 20 most-shorted U.S. companies, according to financial analytics firm S3 Partners.
From the bulls’ point of view, the excitement around the company is about the perennial hunt for growth, said Thomas George, a former portfolio manager at TD Asset Management Inc. who’s now president of Grizzle, a Toronto-based research firm that covers cannabis, crypto-currencies among others.
“Buy-side managers need to augment their portfolio to introduce significant portions of growth,” he said in a phone interview. With Beyond Meat, “we’re talking about something that is just truly in its infancy. This is a 16 to 18 bagger plus opportunity,” he said.
The alternative meat industry could be worth in excess of $34 billion by 2030, and a 40% annual growth rate over the next decade in America is more than achievable, George wrote in a note last week. “You’ve got Snoop Dogg, you’ve got Kyrie Irving, you’ve got some of the largest, most millennial facing superstars behind this,” George said. “Who’s going to care" about Tyson Foods?
George’s estimates are similar to those from Bernstein’s Alexia Howard, one of the two analysts covering the stock, who projects a $40.5 billion addressable market over the next decade. She holds a $81 price target on shares.
Fund managers are among those sounding the alarm...
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This is nut loaf, will Beyond Meat crash?
By: Jamie Powell, Alphaville, Financial Times
May 15, 2019
US stock markets lurched on Monday on fears that the Sino-US trade war was going nuclear.
Amid the carnage, a host of recent IPOs suffered serious share price declines: a newborn Uber closed the day down just under 11 per cent, Lyft fell 5.8 per cent, and video conference business Zoom ended at $72.15, over 6 per cent below its opening mark.
But one IPO stock sailed through these troubled waters serenely, the tsunami of macro-noise barely touching its bows. That company was Beyond Meat, the $4.8bn maker of plant-based meat substitutes, including its flagship product, The Beyond Burger, which raised $240.6m when it listed on the Nasdaq two weeks ago.
Its shares finished the day up 6.2 per cent to $69.50, and, following another 14.7 per cent run on Tuesday, it is now up an eye-popping 219 per cent since it priced at $25 on May 2.
So why the euphoria?
Pull up the financials, and the most striking thing is how ludicrously small the business is relative to its colossal $4.8bn valuation. In 2018, it recorded just $87.9m of revenues, and made an operating loss of $30m. That’s a trailing price to sales ratio of 48 times.
Investors aren’t paying for the present, however. They're after Beyond Meat’s share in an imagined future where the $1.4tn global meat-market has been replaced by a smorgasbord of engineered products that satisfy even the most ardent of carnivores. Products which, crucially, don’t contribute anywhere near the same level of damage to either vaguely Instagrammable animals, or the environment.
And make no mistake, the latter point is fundamental to Beyond Meat’s valuation, and its rival Impossible Foods' recent $300m funding round (featuring storied investors such as Jaden Smith, Questlove and Trevor Noah).
It’s not hard to see why. According to a report by the Food and Agriculture Organization of the United Nations, livestock accounts for 14.5 per cent of all human-induced greenhouse gas emissions. This figure takes into account carbon output from the entire supply chain, from farm energy consumption to the transport shuffling flesh across the globe. Cattle, both through milk and beef, is the biggest contributor, at around two-thirds of total livestock emissions.
Extend meat production's negative externalities further than carbon output, and the numbers are equally as eye-opening. Animal production accounts for 29 per cent of water use in global agriculture, according to a 2013 study by Gerbens-Leenes, Mekonnen and Hoekstra, but uses up to 80 per cent of agricultural land. That’s 26 per cent of Mother Earth’s ice-free surface, according to the FAO. Cattle again is the biggest culprit, using 60 per cent of agricultural land, but only contributing around 2 per cent of calories consumed, per a 2012 report on deforestation. An efficient use of space and resources, it is not.
(One secondary effect that is not discussed is how the scarcity of land generated by livestock farming has propped up land values elsewhere, and therefore home prices, across the developed world, and what might happen if livestock farming stops being a viable business. But that’s another thought for another day.)
This is a boon to Beyond Meat and its competitors because whether you believe in climate change or not, the political forces pushing for environmentally driven economic reform are in the ascendancy. For instance, 11 of 2020′s Democrat hopefuls, including Bernie Sanders, Kamala Harris and Pete Buttigieg, have thrown their weight behind the “Green New Deal” — a radical set of reforms designed to ensure America does its part to stave off environmental disaster, while also kick-starting the economy via various demand-side policies. Similar measures have been proposed by sections of the UK's Labour Party.
Meat has not been explicitly mentioned in the discussion, likely due to the political clout farmers have in swing states. But it’s not hard to imagine red meat becoming a battleground in the near future on both environmental and health grounds. Indeed, in some quarters, the culture war over meat consumption has already begun.
That’s just the supply side of the equation. On the demand side, vegetarianism and veganism are on the rise. The Economist, no less, ran a piece in December titled “The year of the vegan”, noting several trends in the US that suggested 2019 was going to be a pivotal year for the dietary choice. On this side of the pond, the magazine of posh-food peddler Waitrose found that 13 per cent of Brits are now vegetarians, with 21 per cent identifying as “flexiterian”.
In short: the secular trends are there: a growing set of beliefs that meat is inefficient, bad for the environment, and bad for your health. Thanks to these factors, various shades of vegterianism are on the rise.
Beyond Meat answers this call. According to an independent study by the University of Michigan commissioned by the company, its Beyond Burger:
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The Audacious (and Risky) Strategy That Made Beyond Meat a Billion-Dollar Company
Founder Ethan Brown knew that the success of his plant-based meat products hinged on changing people's fundamental ideas about food.
By Brit Morse, Inc.
May 15, 2019
As an entrepreneur, you need to think big. But what if your grand idea completely defies a concept that's long been ingrained in consumers?
If you're Beyond Meat founder Ethan Brown, you roll with it and wait for the rest of the world to catch up. Brown's goal for the company is to fundamentally change people's definition of what meat is. A food scientist by trade, he quit his high-paying job to develop products that look and taste like beef or sausage but are made entirely from plants.
"To get people to buy in long-term that this isn't just a fad or the latest diet craze that's going to come and go, we really have to get people to buy into the fact that this is indeed meat, it's just meat made from plants," says Allison Aronoff, Beyond Meat's senior communications manager.
Brown and his team decided that the best way to convey that message was to get their products placed in the meat section of the grocery store, alongside conventional beef. When they first approached stores, they were only offered a spot in the vegetarian section. Brown viewed the response as a sign that the retailers didn't believe in Beyond Meat's mission. The company turned them down.
Brown didn't back down, and eventually Whole Foods decided to take a chance on the brand with placement in the meat section of their stores. From there the products took off and gained the company entrée into other grocery chains. Since January more than a thousand Carl's Jr. restaurants also have been selling Beyond Meat's burgers, according to The New York Times...
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