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Is Beyond Meat Stock Worth $25 or $250?

Will Ashworth

Beyond Meat (NASDAQ:BYND) is up nearly 200% from its May 1 IPO price of $25. Investors who bought some of the shares during the company’s IPO either sold  them for a hefty profit or are still holding onto them,  satisfied with their gains. 

It's Unlikely That the Marketing Hype Driving BYND Stock Is Sustainable

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However, anyone who bought the stock in late July, when it jumped above $230,  and is still holding it has got to be hoping and praying that Beyond Meat stock is worth $250 and not $25.

While I believe Beyond Meat’s future is still very bright, it doesn’t look as great as it once did. Therefore, as we head into 2020, it’s possible to be either upbeat or bearish  on  BYND stock

Here are my thoughts on both sides of the argument. 

Beyond Meat Stock Is Headed Back to $25

A mere five months ago, Beyond Meat was trading pennies below $240. Life couldn’t get any better for the buyers of its IPO. And then in two weeks, BYND stock lost 40% of its value, and it’s been downhill ever since. 

InvestorPlace columnist Luke Lango made a remarkably prescient call on August 8, suggesting that investors not buy BYND stock above $150.   

“On one side, you have the nosebleed valuation. Beyond Meat has a near-$10-billion market cap. Sales this year project to come in around $250 million, and the company is still far from profitable. So, you have a stock trading at 30x 2019’s estimated sales with no profits,” Luke wrote at the time. 

“Ostensibly, that’s a ridiculous valuation. Thus, on any operational hiccups, BYND stock will get killed. See the big drop from $240 to $160 recently after ho-hum earnings and news of a secondary offering.”

With BYND now trading around $75, it would be interesting to hear  Lango’s view of the stock’s outlook now.

Is it headed down to $25 or is now the time to buy Beyond Meat stock?

I think it is a good time to buy the shares. Here’s why. 


BYND Stock Has the Potential to Return to the $200s

In October, when BYND stock was trading around $89, I recommended that investors ignore the selling of Beyond Meat stock by company insiders and focus on the fact that the company had made great strides on both the top and bottom line. 

Investors tend to focus  on the minutiae of financial statements and  lose track of companies’ business plans. CEO Ethan Brown has an excellent strategy for Beyond Meat for 2020 and beyond. The fact that it might not be as profitable as some would like doesn’t matter to the 47-year-old Brown.  

That’s because Brown’s had a fascination with the detrimental effects of animal protein on our planet since he was a young boy playing on his family’s farm. 

Long before Beyond Meat became a rock star in the world of plant-based meats, Brown was asked ten questions by Fortune magazine. The interview showed that he’s is ready to fail fast on the way to success. The fall of BYND’s stock price from $240 to $75 has probably rolled off his back because he knows success doesn’t come without setbacks.

The interview also demonstrates just how focused he is on making plant-based meats a natural part of everyday living. 

“Creating meat from plants! How we produce protein is the most important environmental question facing our society today,” Brown stated in January 2014. 

“I try to encourage people to shift to plant protein. I think that’s the No. 1 thing that people can do in their lifetime to positively impact climate change.”

Like Tesla’s (NASDAQ:TSLA) Elon Musk, Brown is passionate about changing the world.

It is this kind of vision that I look for from CEOs, not how much stock their companies are repurchasing. At least, I feel that way about growth-oriented companies. 

As Beyond Meat continues to make deals with more retailers and restaurants, I’m confident that Brown will find new ways to bring great-tasting plant-based alternatives to consumers around the world. 

The Bottom Line on BYND Stock

I believe Beyond Meat could be one of the most successful stocks of the 2020s. 

Years ago, when I wrote about  the merits of Lululemon (NASDAQ:LULU), most scoffed at the idea that a company making yoga pants could become a global sensation. However, I could see the forest in spite of the trees.

Although Beyond Meat has a lot of competition, with Impossible Foods likely among the biggest., competition makes companies stronger. 

With Beyond Meat stock  trading at less than 20 times its sales, I believe BYND has a better chance of hitting $125 in the next year than dropping to $25.

So, I don’t believe that it’s a $25 stock. However, to get to $250, it’s going to need some further successes in 2020, with a chicken alternative being the most obvious move.

For investors who can handle above-average volatility, $75 is a good entry point.

At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

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