Is It Too Late to Buy Beyond Meat Stock?

Beyond Meat Inc (NASDAQ:BYND) is a $6.5 billion company that revolutionized plant-based protein. It was founded in 2009 and makes plant-based products designed to emulate beef, meatballs, ground meat, as well as pork sausage links and patties. It sells these products through a variety of partners like Dunkin’ Donuts, Tim Hortons, and Taco Bell.

After landing McDonald’s and Yum Brands partnerships in 2021, is it too late to buy Beyond Meat stock?

The company’s 2019 IPO sent its stock soaring by nearly 200 percent for a short period. Having fallen back down to earth, BYND share price is closer to its initial trading levels than those highs. This could mean there’s plenty of growth potential left, especially considering the most recent partnerships.

Plant-based meat is continuing to grow, from $3.3 billion in 2019 to $13.8 billion by 2027. As a market leader, Beyond Meat is well positioned to maintain its market lead. But that’s no guarantee now that major food and tech companies are moving into the space with aims to overtake it.

Let’s take a bite out of Beyond Meat to see if it will leave investors’ portfolios empty or full.

Why Did Beyond Meat Stock Drop?

Most analysts have a mean BYND share price target of $150.00 per share. That’s about 50 percent more than they’re trading for two years after the company’s storied IPO. A big reason why the stock has suffered is because of growing competition.

Impossible Foods, Tattooed Chef, Soylent, Huel, Tyson, Nestle, Conagra, and more are all working to create plant-based substitutes for animal-based proteins. These companies have established shelf space, more expansive industry relationships, and more capital which combined pose a serious threat to Beyond Meat.

Adding to all this, the pandemic affected both grocery and restaurant food sales, and that bottlenecked growth opportunities. As the economy picks up steam, Beyond Meat should ride the tide of more sales higher. The market size is expanding to an estimated $13.8 billion by 2027 so even competition shouldn’t stifle growth as much as might be the case in a stagnant market.

Beyond Meat is still a small, young company compared to more established global competitors.

That has some investors wondering if Beyond Meat stock can recover.

Will Beyond Meat Stock Recover?

There are strong tailwinds in favor of Beyond Meat continuing to expand. Global meat consumption may not be sustainable as the population continues to balloon. Growing traditional meat, like cattle, is expensive and takes up a lot of land and resources. But plant-based meats are getting cheaper and more sustainable.

As the price goes down, adoption should pick up. Of course, we don’t know if Beyond Meat will necessarily receive those windfalls. And it still hasn’t perfected the steak or other meat textures beyond ground meat.

The forecasted revenue growth for Beyond Meat is impressive and as the company turns those revenues into R&D to finance new product lines and expand its partnerships, the odds are high that BYND stock will recover.

Is BYND a Good Stock to Buy Now?

From a purely financial perspective, Beyond Meat is an appetizing stock right now. The upside potential is as high as $119 per share according a discounted cash flow forecast analysis.

It’s worth noting that pessimism has creeped into the company’s “story” – even the company’s bulls are starting to ease up on the stock and lower their expectations.

Based on past history, the odds are about the same that the stock could double or be chopped in two over the next year. And it’s likely to do so multiple times. Because Beyond Meat share price is so volatile, investors who are risk-averse may be better suited looking elsewhere.

So, if it’s not a growth stock then is it a dividend stock?

Does Beyond Meat Pay Dividends?

Beyond Meat hasn’t paid a dividend so far, but it could in the future. It does not have an annual dividend yield, but there are plenty of food companies that do pay dividends.

Nestle ADR (OTCMKTS:NSRGY), Mondelez International Inc (NASDAQ:MDLZ), Kraft Heinz Co (NASDAQ:KHC), General Mills, Inc (NYSE:GIS), Hershey Company (NYSE:HSY), Tyson Foods, Inc (NYSE:TSN), and Hormel Foods Corp (NYSE:HRL) are all dividend-paying food stocks.

If you’re a dividend investor, it’s because you want consistent and dependable payouts for liquidity. Established firms like Mondelez (MDLZ) make for better portfolio fit if that’s the case.

It should be noted also that Beyond Meat earnings have been substantially negative for some time and that limits the company’s ability to pay dividends, even if it wanted to. Until management can turn the red bottom line black, investors should not expect to receive any dividend payouts for the foreseeable future.

Is It Too Late to Buy Beyond Meat Stock?

Beyond Meat share price has been turbulent over the past few years. Ever since it went public in a 2019 IPO, it has been a bumpy ride for investors, and there’s no reason to believe that will change. If you truly believe in the BYND investment thesis, buying the stock and holding onto it for a decade may be the best bet.

In the short-term it may be prudent to ignore the wild price gyrations. There’s no dividend, and the competition is rising. Still, Beyond Meat does have partnerships with big restaurant brands like McDonalds (MCD) and Yum Brands (YUM). This could grow it into a major presence on the stock market instead of just in your local supermarket. 

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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.