Beyond Meat (BYND): Beyond Its Value or Vegetarian Leader?

Ethan Brown's enterprise enjoyed a big boost following its IPO, starting around $25, after the first day of trading shares soared to a stunning $65.75 end. The rally didn't quit there, a high of $239.71 per stock was reached. But uncertain times ended that rally and since then the stock has lost a big part of its initial growth.

Fears of increasing competition raised since other companies are developing similar products for a lower price. This is the biggest fear for investors, Beyond Meat’s price for its sausages and hamburgers are 5 times that of regular meat. Also, companies like Nestlé (SWX: NESN), Tyson Foods (TSN) (a former investor in Beyond Meat) and Impossible Meat compete on the same market. One could argue that Beyond Meat (BYND) has a first movers advantage and tries to identify itself as significantly different. The truth however, is that Beyond Meat (BYND) hasn’t achieved this status yet and big companies like Nestlé (SWX: NESN) are breathing in their neck. In recent years the vegetarian food market has been growing and companies like Nestlé (SWX: NESN) are getting more and more interested in this future-proof market. Nestlé can profit of their internal economies of scale. And along with its tremendous lobbying, marketing possibilities and long ongoing relations with producers it can be real threat for Beyond Meat.

Currently the stock has a 10D SMA of 75,61 and is seemingly stable on the short term. But as pictured above, there are a lot of challenges ahead. But luckily there are some interesting developments. Recently Beyond Meat (BYND) and Impossible Food (which hasn’t gone public yet) started a fierce battle on the restaurant and fast-food market. KFC initiated a test with Beyond Meat, and Subway announced a Beyond Meatball test at 700 of its restaurants in the US and Canada. At the same time Burger King started selling the Impossible Whopper in all its restaurants. It is beginning to look like restaurants either choose Beyond Meat or Impossible Foods in their craving to grab a bite of this growing market. But this is only encouraging the Spartan-like battle which will only grow in intensity in 2020.

The Coca Cola Case

For now we’re seeing an interesting contest reminding us of the classic Coca Cola-Pepsi rivalry. These two brands differ themselves of basic cola brands based on their marketing efforts and slightly better taste. The main difference is that these brands are at max three times as expensive as the cheapest brand. Beyond Meat can be seven times as expensive as similar natural meat and its taste isn’t free of debate. The question is if Beyond Meat and Impossible Meat are able to really display themselves as a good alternative to real meat. We know marketing can make up for a threefold in selling price, but if they are able to fill the rest of the gap we still have to see. The rest of the gap should come from their lower environmental impact and healthy imaging. But we shouldn’t close our eyes to the increasing rate of fires in The Amazon due to the surging soy-demand. Pushing the problem to another part of the world isn’t the same as resolving it.

Disclaimer: The writer of this article holds Beyond Meat (BYND), this article should not be interpreted as investment advice or anything like that.

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