Beyond Meat’s incredible rally masks a bitter reality

Beyond Meat is back in the spotlight. The company’s stock has soared more than 600% over the past three trading days, an astonishing turnaround for the once-struggling plant-based meat pioneer. Shares that were trading at just $1.10 at the start of the month are now hovering around $4 on Wall Street.

To some extent, Beyond Meat seems to have come full circle, from a breakout success story to near-collapse, and now, at least temporarily, on the rise again. Yet analysts warn that the rebound may be short-lived.

The company’s early years were marked by spectacular momentum. After going public in 2019, Beyond Meat’s shares surged from $25 to nearly $240 within months, valuing the company at more than $14 billion. Driven by the rise of veganism and growing awareness of health and environmental issues, it attracted investors such as Bill Gates and Leonardo DiCaprio. Lockdowns during the pandemic further boosted demand, helping first-quarter 2020 sales jump 141% to $97 million.

But the hype faded almost as quickly as it had come. Consumers balked at Beyond Meat’s high prices, made worse by post-Covid inflation, and enthusiasm for plant-based meat waned. The company’s market value tumbled to under $80 million this year, and revenues are projected to decline by 14% to around $281.6 million. "Animal meats are in the true cyclical fashion of consumer trends, having a moment that currently leaves less room for our products and brand," founder and CEO Ethan Brown told analysts during the company's August conference call. "You've got these cultural moments that occur. And we happen to be on the other side of the particular moment."

Earlier this month, Beyond Meat’s stock plunged after completing a debt conversion deal that massively diluted existing shareholders. Bondholders received hundreds of millions of new shares, effectively wiping out much of the previous investor base.

Still, signs of life soon emerged. The stock jumped 80% in a single day after Beyond Meat announced an expanded distribution deal with Walmart, under which select products will be sold in 2,000 U.S. stores. But the biggest driver of the company’s rally appears to be not renewed consumer appetite, but the return of the “meme-stock” crowd.

Retail investors, spurred by social media posts and a new Reddit thread titled “Make Beyond Meat Great Again,” piled into the stock, echoing the frenzies that once propelled GameStop and AMC. Ironically, the same debt deal that crushed Beyond Meat’s valuation also enabled the surge: it increased liquidity, giving meme traders a chance to execute a classic short squeeze.

Beyond Meat was one of the most heavily shorted stocks in the U.S. As retail investors bought up shares en masse, short sellers were forced to repurchase them to cover their positions, triggering a price spike. According to data from research firm S3 Partners, short sellers have incurred losses of roughly $50 million since the rally began.

Despite its sudden popularity, Beyond Meat’s fundamentals remain bleak. The company continues to lose money, revenues are declining, and the debt conversion was more of a survival tactic than a strategic breakthrough. “There’s no comprehensive explanation of how the company can fundamentally change its position and operate as a profitable business,” Tom Bruni of Stocktwits told MarketWatch.

In the second quarter, Beyond Meat reported a 20% year-over-year drop in revenue to $75 million, missing expectations. The broader U.S. plant-based food sector is also struggling: according to the Good Food Institute, revenue in the market has fallen 18% over the past two years to $1.17 billion.

For now, Beyond Meat’s recovery appears powered more by momentum than meatless innovation, another reminder that in today’s market, narrative can be just as powerful as numbers.