Beyond Meat has only been public for a little under two months but has already made a huge splash on the stock market. The company’s IPO launched at $25 per share, with the first shares beginning to be traded at $46, and ending at $65.75 per share. This was a gain of 163%. It was the largest IPO for a company that raised over $200 million since the start of the century in 2000. Why was this IPO so historic? What makes Beyond Meat one of the most popular companies right now? Well, there are a few answers to these questions.
Beyond Meat is a company that wants to innovate the way we eat. They created a burger called the “Beyond Burger” that people like, without including any meat in it. According to Beyond Meat, this is how they do it. “We use a proprietary system that applies heating, cooling, and pressure to align plant-proteins in the same fibrous structures that you’d find in animal proteins. We combine this process with ingredients that mimic the composition of animal-based meat, like plant-based proteins, fats, and minerals.” They’re creating environmentally friendly foods that people like to eat, and this is a huge reason why they’re doing so well. However, there are also concerns about Beyond Meat. Some fear that the company won’t be able to keep up with consumer demand. Some feel like it’s manufacturing practice is flawed and susceptible to absolute disaster. So, what does the future of Beyond Meat look like?
The demand for meat-less burgers is at an all-time high, with no sights of slowing down anytime soon. The market is pretty new, with Beyond Meat leading the way. Even though it feels like we’re just now starting to hear about Beyond Meat, the company actually was founded a decade ago. The Beyond Burger also has great packaging. It’s look offers consumers something that looks different, healthy, and tasty.
The biggest hurdle for Beyond Meat at first was getting its product into supermarkets. The company wanted its burgers to be placed in the meat aisle, but the problem was that they weren’t actually meat. Beyond Meat then toyed with their product even more, until the Beyond Burger was launched. It was a dramatic improvement to its predecessor and grocery stores slowly started to introduce it.
There’s no question that Beyond Meat is one of the biggest names in plant-based protein right now. In 2018, Beyond reported revenue of $87.9 million, up 170% from the previous year’s net sales of $32.6 million. More and more people are deciding to enjoy patties without any actual meat in them. There’s an environmental aspect to this, where a lot of consumers of Beyond Meat products want to cut down consumption of meat from animals in an effort to help the environment. Many also do it for health purposes.
Beyond Meat isn’t only sold in the supermarket. Here’s a list of all the major chains serving Beyond Meat in some of their products:
Impossible, a rival to Beyond Meat is also rolling out burgers with fast food chains. Burger King introduced the “Impossible Whopper” and Taco Bell added vegan meat to some of their items. While this doesn’t directly help Beyond Meat in the short term, it shows that meatless burgers are starting to get more and more popular around the food industry. Having Burger King, a company with the name burger literally in its title, launching a burger without any meat in it is a really big deal. It shows that people are really interested in these products, and it’s something positive for the future growth of the industry.
Growth has been something that investors are worried about with Beyond Meat, but not in the reason you’re probably thinking. The company has grown so fast within the past year that investors are worried about how they’re going to be able to keep up with increasing demands. Right now, Beyond Meat only has two factories. They also don’t have contracts with the two companies that help run their factories. So, if one of the companies decided it wanted to cut ties with Beyond Meat, the company would essentially be screwed. Beyond Meat is aware of these concerns, with the company addressing them in a statement: “We believe there are a limited number of competent, high-quality co-manufacturers in the industry that meet our strict quality and control standards, and as we seek to obtain additional or alternative co-manufacturing arrangements in the future, there can be no assurance that we would be able to do so on satisfactory terms, in a timely manner, or at all.”
This could spell disaster for the company if something were to go wrong. They most certainly need to keep a diligent eye out for anything that could cause their production to ease, because Beyond Meat’s production is at an all-time high right now. The company has already seen shortages and even asked for volunteers who would be willing to work weekends in their California location. There are legitimate concerns about production that Beyond Meat is going to have to address pretty soon if it wants to reach its full potential.
All of this being said, the concerns are all hypothetical. Nothing has gone wrong for Beyond Meat (yet). In the past year, they’ve made phenomenal strides as a company. They had the biggest IPO of 2019, and their future is as bright as ever. The company is going to have to keep a close eye on its production. If even a small thing goes wrong and Beyond Meat isn’t able to send out its product to vendors, catastrophe could ensue. Beyond Meat is most certainly one of the most exciting companies to watch in the future and a company that could change the food industry as we know it.
Interested in the data used for this analysis? We recommend our U.S. Fundamentals and Stock Prices bundle!