Beyond meat – The lure of the TAM
Remember the excitement surrounding the Beyond Meat IPO?
The BYND IPO was priced at $25.00/share on May 1st, 2019, and closed up 163% to $65.75/share on the first day. It hit a high of $243.90/share several months later, on July 26th, trading at 63.1x Next Year’s Sales (a). For some perspective, at the time — Amazon often cited as an “expensive” FAANG stock — was trading at 3.5x Next Year’s Sales.
Bulls argued that the “total addressable market (TAM)” was massive.
Soon after the IPO, we cautioned investors to be careful.
Certainly, there seemed to be room for such a product in the marketplace. However, we reminded everyone that execution matters, competition matters, and the future was unknowable. Costs and appetites change. Novelties rarely become staples. Tastes are fickle. There are very few “guarantees” and the stock was behaving as if perfect execution into an always-receptive market was a fait accompli. At the time, we were reminded of the English proverb: There’s many a slip ‘twixt the cup and the lip – which implies that even when a good outcome or conclusion seems certain, things can still go wrong.
Never forget the fundamentals
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