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Plant-based foods neither healthy eating nor healthy investing | Deduced Reckoning

Joan Lappin
Joan Lappin

It has been 25 years since heavyweights Mike Tyson and Evander Holyfield climbed into the ring together for a world championship fight at the MGM Grand Garden Arena in Paradise, Nevada, on Nov. 9, 1996. Time flies when you are having fun.

Tyson was most intent on intimidating his opponent but Holyfield surprised Tyson  with an 11th-round TKO. In their rematch a few months later, referee Mills Lane stopped the fight after Tyson bit off a chunk of Holyfield's ear.

This weekend, the new COO of Beyond Meat has hit the news for allegedly biting the nose of a person with whom he wound up in an altercation after an Arkansas football game. Doug Ramsey left Tyson  Foods in December after a 30-year career there. So far this year, and from the time late last year when Ramsey arrived, the stock is down >70%. One presumes, he like Mike Tyson, is under a large amount of pressure.

During 2022, TGIF’s, Del Taco, McDonald’s, Kentucky Fried Chicken and other large chains with big buying power did test trials with Beyond Meat in their stores. But those trials are now ended and the conclusion is not one of enthusiasm for the plant-based products.

I warned about this stock when the company first came out in May 2019. One of the major problems with plant substitutes for beef is that in order to make the product taste like anything worth eating, it is loaded with salt. That alone makes it very unhealthy. Since COVID struck three years ago, supply chains have been disrupted and beef has actually become cheaper than its plant-based substitutes. The business also has a low cost of entry, especially for food companies with existing distribution systems. It was all about futures at a time when even Cathie Wood looked like she knew what she was doing investing in “disruptive” companies. And meme stocks were on fire.

When this IPO was brought public, it boasted a broad list of sports celebrities and an investment by the Bill and Melinda Gates Foundation. In its first day of trading, it rose from $25 to $65, a gain of 163%. At its zenith at 239.71 on July 26, 2019, BYND had soared over 1000% in a period of just weeks. Then reality set in. The final fatal mistake was the company decided to introduce a beef jerky substitute. A witch's brew of mistakes probably went into that decision and the company reported a loss of close to $100 million in a recent quarter. It doesn’t have enough cash to survive another year.

Impossible Foods is also offering plant-based foods and its CEO has said you wouldn’t want to eat any of these products more than now and then. That means the basic premise of “healthy eating” is not something that applies to these foods. It is exactly what I foresaw when I wrote about the company when it first started trading. Nothing has changed except the stock has zoomed and then cratered to half the IPO price.

Joan Lappin CFA has been called an “investment guru” by Business Week and a “top manager” by the Wall Street Journal. The Sarasota resident founded Gramercy Capital Management, a registered investment adviser, in 1986. Email JLappincfa@gmail.com. Follow her on twitter: @joanlappin. Her past columns appear at heraldtribune.com/business/columns.

This article originally appeared on Sarasota Herald-Tribune: JOAN LAPPIN: Plant-based food companies turn into unhealthy investment