Beyond Meat (NASDAQ:BYND) has been a volatile stock in 2019. Unfortunately, the question investors have to ask is, have they received a bang for their buck? The first part of the year saw the stock rise to over $234 per share. However, it’s been a different story in the second half as the stock has come back to earth.
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As of the end of trading on Dec. 18, Beyond Meat was trading at just over $77 per share. That still puts the stock up an impressive 15% for the year, but the trend is not the company’s friend. And I think the stock is at a tipping point. Adding fuel to the fire is the recently proposed Real MEAT Act that is putting the company in the crosshairs of politicians.
Is Beyond Meat Using Deceptive Advertising?
The intent of the Real MEAT Act is to put an end to the deceptive labeling and marketing by plant-based meat manufacturers. Senator Deb Fischer of Nebraska is introducing the legislation. In an editorial for The Wall Street Journal, Fischer cites a survey from the National Cattlemen’s Beef Association. The survey finds that 80% of consumers believe alternative protein products are “nutritionally equivalent or superior to actual beef.”
The problem, as Fisher writes, is that there is no evidence to support that claim. Fisher goes on to say that a four-ounce serving of lean ground beef contains a range of nutrients that plant-based meat does not have. And real meat is also better in terms of fat content (including saturated fat), sodium and protein compared with comparably sized protein-based alternatives.
Beyond Meat is not the only company targeted by the legislation. However, Fisher did specifically write that the company removed a fraudulent statistic from its website. Specifically, Beyond Meat claiming that eating meat increases the likelihood of cancer and heart disease.
All Publicity Is Good Publicity
There is a saying that any publicity is good publicity. The fact is that the Real MEAT Act is getting investors talking about Beyond Meat. The very fact that plant-based alternatives to traditional meat products are drawing congressional attention indicates that, on some level, the industry is concerned. But the question is not whether their claims and concerns are true – and it appears they have some validity. Sometimes it’s better to not draw attention to your competition.
The undeniable opportunity that plant-based meat products have is to get consumers to taste the product. If consumers do not discern a different taste and perceive that they are a “healthier” alternative, this legislation could be a gift in disguise.
Beyond Meat Has Issues Beyond Congressional Intervention
I am skeptical of Beyond Meat. In a previous article, I said that the company’s meteoric rise this year was due to altruism and emotion. As the facts have settled in, the company’s stock is coming down to earth.
The company doesn’t have a unique selling proposition. It doesn’t have a proprietary formula. And I don’t see it as being able to grow its active user base. In fact, if the Real MEAT Act has any credibility, it’s possible that Beyond Meat doesn’t really know who its target market is. Or maybe they know that the only way to the sustainable path they need is to expand their base beyond vegans and vegetarians.
And that’s my real “beef” with Beyond Meat. It doesn’t seem to have a large enough base to become a mainstream alternative. It has competition from other pure-play companies and is drawing competition from bigger corporations as well.
What it seemed to have going for it is that it had to be healthier. After all, it’s plant based. That has to be a healthier alternative, right? The answer is becoming, maybe not. And the Real MEAT Act opens one more flank for the company to defend.
As of this writing, Chris Markoch did not hold a position in any of the aforementioned securities.
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