Beyond Meat shares plunge after stock sale ban is lifted
Beyond Meat's stock price plummeted after the regulatory "lockup period" that had restricted company insiders and private investors from selling their shares in the alternative meat company ended on Tuesday.
Beyond Meat shares plunged 21% to about $83 per share, their lowest level in five months. In May, the El Segundo, California-based company went public in one of the most successful initial public offerings of the year. At one point in July, shares were trading at around $235, or more than 800% over the offering price.
On Tuesday, Beyond Meat posted its first profitable quarter as a public company, topping Wall Street forecasts in recording income of nearly $4.1 million on revenue of roughly $92 million.
In an earnings call Monday with analysts, Beyond Meat executive chairman Seth Goldman addressed investor concerns around the expiring lockup period. "While we recognize short-term reactions to these milestones are often marked by heightened uncertainty, we believe that Beyond Meat is in a stronger position today than at any other time in its history," Goldman said.
Even with the drop in the stock price, private investors who sell their shares are expected to make a killing on the stock, which is still trading about 228% more than its public offering price of $25 per share. Private investors typically purchase shares for much less than the offering price.
Short sellers — investors who bet against a company and profit from a fall in its stock price — are also cashing in on the decline in Beyond Meat shares. After losing more than $1 billion on Beyond Meat since the July high of $235, short sellers made about $272 million in profits in October as the stock tumbled, according to Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.
Over the longer term, investors are watching to see how Beyond Meat copes with growing competition from food industry giants. Companies such as ConAgra, Hormel, Nestlé and Tyson have all entered the emerging plant-based meat market, which analysts estimate could reach $40 billion over the next decade.
Beyond Meat CEO Ethan Brown said in the earnings call Monday that the company has been "preparing for a competitive market for years."