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Beyond Meat stock is exploding and some are betting that won't last long

Brian Sozzi
Editor-at-Large

Well, apparently a business selling faux meat is worth $4.9 billion... and counting.

Beyond Meat’s (BYND) stock surged to another record Wednesday, up 9% to $86.92 by the time the closing bell rang on Wall Street. Investors cheered the addition of Beyond Meat sausages to several breakfast sandwiches at select Tim Horton’s locations.

It seems all Beyond Meat’s employees know right now is a higher stock price. The stock famously exploded 162% to $65.60 on its first day of trading on the Nasdaq Composite earlier this month. The company ended its initial day of trading with a market value of $3.8 billion — it’s now $4.9 billion, according to Yahoo Finance data.

Beyond Meat priced its initial public offering at $25. The enthusiasm for Beyond Meat reflects the shift in eating habits sweeping across the nation. Millennials and teens are waving goodbye to beef and other meats and hello to plant-based alternatives.

Indeed, one heck of a run for a business that has never earned a profit in its lifetime.

And investors haven’t forgotten about that little nugget — and are placing their bets accordingly. Beyond Meat short interest is currently $373 million, or a colossal 42.48% of the float, according to new data from S3 Analytics. While a short position is often a bet on a company’s stock losing value, in the case of Beyond Meat the crowded negative bets — and momentum in the stock — may actually mean more upside in the near-term. In trader parlance, a short squeeze — where prices shoot higher as the shorts are forced to cover their positions— could be in play given the strong interest in buying Beyond Meat’s stock.

(AP Foto/Mark Lennihan)

“Beyond Meat is definitely a candidate for a short squeeze as rising stock borrow costs eat into expected alpha and make the short trade less profitable,” Ihor Dusaniwsky, managing director at S3 Analytics, told Yahoo Finance.

The shorts are feeling the pain on their wagers, Dusaniwsky pointed out. The group is down $96.5 million in mark to market losses since Beyond Meat’s IPO.

Enjoy the ride, Beyond Meat... it won’t go on forever. At least the shorts think so.

Brian Sozzi is an editor-at-large and co-host of Yahoo Finance The First Trade. Follow Brian Sozzi him on Twitter @BrianSozzi

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