Beyond Meat Vs Impossible Foods Stock: Which Is Best?

Beyond Meat vs Impossible Foods Stock: There’s a war brewing in the meatless industry. Who will be crowned champion?

In this corner of the ring, we’ve got Beyond Meat – a vegan brand touting their own meatless versions of burgers and sausages.

And in that corner, Impossible Foods. They might only have a single product, their Impossible patties, but make no mistake – they’ve got a following and they’re growing.

The Pros and Cons of Investing in Meat Substitutes

Today’s real meat industry isn’t sustainable. It’s not efficient, and with the growing world population expected to reach around 10 billion by 2050, it’s quite simply not enough.

In addition, producing meat has been blamed as a cause of damages the environment, consuming massive amounts of water, and polluting the environment.

Even so, meat consumption around the world is up – folks are eating more than they ever have. It’s not likely that a vast amount of the world’s population will go vegan anytime soon, so coming up with ways to supplement the industry is necessary – especially if we want to see any significant shifts away from real meat consumption.

This is where meat substitutes play a role – but how likely are these startups to have the staying power needed to actually begin investing in them?

Meat substitute startups have garnered a fair share of investments, actually. As of May 2019, cultured meat startups had raised over $16 billion since 2009 – $13 billion of which came in 2017 and 2018. Google’s co-founder, Sergey Brin, is one of the industry’s leading investors – so too are Bill Gates and Richard Branson.

While there’s certainly a lot of optimism, the cultured and plant-based meat industries still have far to go before they’ll be considered a threat to real meat’s hold. For instance, plant-based meat has seen the most rapid growth, but its market share is still less than a percentage point.

Is Beyond Meat Stock A Buy?

Exactly half of this company’s sales are to restaurants. In light of the COVID-19 pandemic, that poses a huge problem for 2020’s Beyond Meat stock.

Sure, many restaurants have pivoted and switched to carry-out, pickup, or delivery options – but the virus has done much damage to the restaurant industry as a whole.

Restaurants aren’t feeding the same amount of people as they once were, meaning they don’t need as much inventory. It follows that this lack of demand is going to be passed on to suppliers, such as Beyond Meat.

That said, Beyond Meat hasn’t altered its projections for 2020 – at all. Even one of its largest competitors, Impossible Foods – who, by the way, sees nearly all of their sales from restaurants – also said they’ve seen no disruptions due to the virus.

Whether they actually haven’t or if it’s just wishful thinking on behalf of these companies, buying into the cultured meat industry doesn’t seem like a smart move at this time.

Should You Invest in Impossible Foods?

While Beyond Meat is a publicly traded company, Impossible Foods remains private. So, in all honesty, not only can Impossible Food report their numbers as they see fit, but you can’t invest in their stock anyway.

It is possible that both companies are making up for their usual restaurant sales in grocery store sales – people haven’t stopped eating, after all.

But it’s just a little unsettling that companies whose bulk of sales normally come from restaurants are stating they’ve seen no change in sales while restaurants are largely shuttered at this time.

Beyond Meat Vs Impossible Foods: The Bottom Line

Beyond Meat presented its Q4 report in February illustrating solid forward movement, but it still remains to be seen the actual effect the pandemic may have had on this company. In fact, investment analysts are choosing to remain neutral on future Beyond Meat share prices.

Their Q4 report showed revenues of $98.5 million while analysts had projected only $84.8 million. Breaking this down, however, the company took a hit in retail sales, falling short by over $6 million. This is offset by their restaurant sales revenue, however, which came in over $20 million.

The boost could be due to the fact that Beyond Meat extended worldwide distribution. In Q3, Beyond Meat supplied about 58,000 restaurants and retailers – by the end of Q4, this number was over 77,000 establishments. In retail, the company sees about a 46% repeat purchase rate.

Part of the issue with Beyond Meat is how the company is perceived by the consumer. All positive momentum aside, in a recent survey of adults, over 60% stated they do not consume plant-based or cultured meats and don’t have any interest in doing so.

At this point, a boost in restaurant suppliers and a better-than-expected Q4 isn’t quite enough for investors to suggest buying Beyond Meat Stock.

In fact, many investors appear disappointed. The company saw great success when first starting out, but many think this was a boon due to consumers simply being curious. Beyond Meat showed little follow-through to keep that base and grow it.

Investors state, however, that this industry’s competition is sure to intensify – but more so for companies that take their research and development phases seriously. To stay competitive, Beyond Meat could have to lower their retail prices in comparison with traditional meat and other meat products.

So, the bottom line on Beyond Meat vs Impossible Foods stock?

Wait it out. Since you can’t purchase Impossible Foods stock just yet, and Beyond Meat doesn’t appear to be quite out of the woods yet, taking a wait-and-see attitude is the best possible option at this point.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.