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.

Even if just a small percentage of meat-eaters globally decided to switch to meat alternatives, revenues would be almost unlimited, especially in relation to the current size of the company. After all, they argued, the product was just plain better: 
• better than real meat 
• better for your health 
• better than all competing burgers  
Many also claimed they were light years ahead of the competition and they would continue to spend copiously on R&D (well beyond its current resources at the time, by the way). 

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

The wholesale food business has very low margins, so even if revenues increased dramatically, profits would be much less attractive than many other businesses. Publicly-traded “protein” companies such as Tyson, generally trade at much lower multiples – 0.7x Price/Sales. In short, be careful what you wish for. 
As of April 11, 2022, BYND trades at $43.96/share (4.7x Next Year’s Sales and has traded as low at $36.17/share and as high as $243.90/share (as mentioned above).  
If you’re keeping score at home, BYND is down 33.2% since the close on the first day at a time when the S&P500 is up 59.6% during the same period. What a ride! 
Source: Bloomberg 

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