For investors who want to understand what's next for Beyond Meat, you might want to take a look at bitcoin.
In May, the meat alternatives manufacturer set their original stock price at $ 25 per share. Since then, the stock has risen 794% to reach a record high of $ 239.71 last week. The shares have climbed too high for some Wall Street analysts to recommend buying the stock.
Beyond & # 39; s stock fell 4% in morning trading ahead of the earnings report after Monday.
Bitcoin, which is known for its volatility, is up 79% since May 2, the day Beyond debuted in the public market. Cryptocurrency reached nearly $ 20,000 in December 201[ads1]7, fueled by a speculative bubble as it garnered attention from mainstream media and retail investors, but its value has been reduced by half since then. The dramatic fall means that some investors were burned when bitcoin's wealth was turned around.
Short sellers try to make money by betting that Beyond & # 39; s stock will experience a similar fall. Short sellers borrow a stock with the expectation that the price will fall and the investor can buy it back with a profit. Nearly 44% of Beyond & # 39; s outstanding shares are shortened, according to data from S3 Partners.
"It captured the imagination of every amateur black seller out there," said Andrew Left of Citron Research.
Left, one of Wall Street's most prominent card sellers, said his company covered the flow of the short game on Beyond. Covering the float involves buying the same number of shares that an investor has shorted to offset losses if the stock price jumps even more.
Friday's rise resulted in $ 66.5 million in losses for short sellers, according to S3 Partners. So far in July, they're down to $ 427.8 million.
"This has nothing to do with the company, but it doesn't take away the company," said Venstre. "They're not doing anything wrong."
Currently, Beyond is the only listed company that specializes in making products that reflect the texture and taste of meat. Its main rival, Impossible Foods, which deals with Little Caesars and Burger King, remains private. Beyond will also soon face competition from traditional food companies such as Nestle and Tyson Foods, which are wading into the world of plant-based meat.
Analysts surveyed by Refinitive expect Beyond to report a second quarter loss of 8 cents per share and revenue of $ 52.7 million. After the first quarterly report since its publication, the shares rose as high as 23% in demand trading.
The projected loss in the second quarter is one reason analysts see Beyond & # 39; s valuation as unjustified. Although consumers are increasingly interested in reducing meat intake, Beyond is still losing money as it rushes to meet increased demand.
There are also steps in unknown waters. It remains to be seen how much long-term demand there is for the products. The company could conceivably increase production and then end up with a surplus of Beyond Sausages and Beyond Burgers.
So far, 21.6% of American households buy meat alternatives, according to Nielsen data. Of all those buying meat alternatives, 98% bought meat, a sign that most of the demand comes from so-called flexitarians. While US consumers bought $ 95 billion of meat last year in grocery stores, meat substitutes totaled $ 893 million in revenue, Nielsen found.