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Home / Business / Beyond Meat shares plunge 20% despite solid results as insiders rush beyond

Beyond Meat shares plunge 20% despite solid results as insiders rush beyond



Ethan Brown, Founder and CEO of Beyond Meat Inc., speaking during the company's initial public offering (IPO) at Nasdaq MarketSite in New York, USA, Thursday, May 2, 2019.

Michael Nagle | Bloomberg | Getty Images

Wall Street was mostly gay on Beyond Meat after the alternative meat producer reported a much bigger profit than expected, but they warned that the basics didn't matter right now for the once red hot, public offering.

Tuesday is the first time since the IPO that insiders can sell the stock, which could lead to short-term pressure, analysts warned. Approximately 75 to 80% of the outstanding stock is available for trading after the expiration.

Shares plunged 20% to around $ 85 as investors expected a wave of insider trading. At that price, the stock would be down 65% from its record high of $ 239.71

in July when the alternative meat hype reached a fever pitch.

"A lot depends on the amount of sales pressure over the next few days," said JP Morgan's Ken Goldman in a note to clients in which he raised revenue estimates for the next two years and kept his overweight.

"Putting the expiry in the past in the end should incentivize some investors to start buying the stock again, though the shares may fade lower in advance," Goldman warned.

Generally, founders, employees and early private investors who purchase a company before it is published are restricted from selling for between 90 and 180 days. This is called a lockup period, which can cause a flood of inside sales and squeeze the stock.

"Despite solid results, the probability of early-stage investors being paid on a stock that is still up about 4x since the IPO is still a drag in upcoming trading sessions," said Barclays analyst Benjamin Theurer in a note to clients Tuesday.

Despite Tuesday's sale, beyond Beyond Meat, its shares are still more than 230% since the May listing. Despite the pressure the stock looks right now, Beyond Meat is a success story, gaining profitability from its third earnings report at a time when listed companies are being investigated for their lack of a bottom line.

CEO does not sell

Beyond Meat on Monday topped analysts' expectations of fiscal and revenue in the third quarter. The company reported $ 6 million in revenue of $ 92 million, while analysts estimate $ 3 in revenue of $ 82.2 million, according to Refinitive. The company saw sales grow across both the grocery and restaurant divisions as meatless meat attracted more customers and held back existing customers.

"In terms of profitability, the company provided a solid expansion of the gross margin, supported by the greater operational effort and productivity efficiency, as well as the fresh platform, which provides higher profitability levels," said Theurer.

Beyond also lifted the outlook for the entire year. It now expects revenues in the region of $ 265 million to $ 275 million, up from a previous forecast of more than $ 240 million. Many Wall Street analysts said the fourth-quarter guidance is too conservative.

Beyond Meats CEO Ethan Brown said he is not touching his shares after the deposit and is focused on expanding Beyond Meat to a $ 40 billion company in revenue. [19659002] "For employees, there is security around the person's circumstances that they have, if they just need liquidity," Brown told CNBC's "Squawk Box." "I think the early investors are the investor mandate, what does the company require them to do?"

Overall, the Wall Street lockup period looks like a short-term overhang.

– with reporting from CNBC's Dominic Chu and Michael Bloom.


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