Fake Meat Is Bleeding Money

There’s no animal blood on the floor in plant-based protein maker Beyond Meat’s processing facilities, but for three years the company has been bleeding cash. In fact, investors in the once trendy fake meat company have seen losses mounting.

Beyond Meat will release its fourth-quarter earnings on Thursday (Feb. 24), but caution flags were out to investors ahead of the report. Analysts project the quarter's loss per share will more than double. In the third quarter, Beyond Meat's revenue rose 13% year over year to $106.4 million, but net loss was $54.8 million. Shares that traded over $234 in July of 2019 were trading under $48 on Wednesday.

J.P. Morgan stock analyst Ken Goldman called Beyond Meat “the worst performer in our universe in the last year.” That’s because Beyond’s stock price fell 67% in a market that saw a median gain of 13%. Additionally, Goldman said, Beyond fell 15% over the past month, and 10% over the past week.

Garrett Duyck, an analyst for Seeking Alpha, said: “For the past three years (Beyond Meat) has been bleeding cash. The free cash flow per share has yet to be positive and declining margins is taking it lower. R&D expenses are up 78% YoY which is responsible for 50% of the operating loss.”

Beyond Meat has been lauded as a disruptor that was going to change the meat market entirely, putting animal protein out of business, Duyck notes. But he says the company continues to face obstacles even as over $465 million worth of its plant-based protein has been sold the past three years.

One obstacle is that it remains higher priced than beef, as much as two times higher. And, Beyond Meat is still not meat. There are many consumers who prefer meat and are willing to pay more for it.

“It seems the more faux meat they sell the more faux money they make,” Duyck said.