Shares of Beyond Meat Jumped on Tuesday

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Shares of Beyond Meat Jumped on Tuesday

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What happened

The shares of Beyond Meat (NASDAQ: BYND) climbed nearly 9% on Friday, May 8 after the company reported their First Quarter results for 2020 followed by a 5% jump on Tuesday, May 12. this may be only the start in an upward/ bullish trend.

Revenues increase following a shortage of beef in the market.

So what

Beyond Meat is a leading food-producing company that provides plant-based meat alternatives. They reported revenue of $97.1 million, an increase of 141%, compared to revenue of the previous year of $40.2 million. 

Gross profit was $37.7 million, or 38.8% of net revenues, compared to gross profit of $10.8 million, or 26.8% of net revenues, in Q1, 2020. The net income was $1.8 million, or $0.03 per share, versus a loss of $6.6 million, or $0.95 per share, in the prior-year period. Wall Street had expected a loss of $0.06 per share. 

According to the U.S. Centers for Disease Control and Prevention, around 1% of the industry’s workforce, that is about 5000 workers, are reported to be infected by COVID-19, with 20 deaths.

This has led to 18 facilities shutting down. U.S. beef and pork production capacity shrank 40% in April, says Will Sawyer, lead economist at agricultural lender CoBank. U.S. consumers, Sawyer predicts, could see 30% less meat in grocery stores by Memorial Day, at prices 20% higher than last year.

Now what

On April 22, 2020, Beyond Meat announced today that it has entered into a new $150 million five-year secured revolving credit facility (the “New Credit Facility”) to support its future growth initiatives. The New Credit Facility also includes an accordion feature for up to an additional $200 million. 

Mark Nelson, Beyond Meat’s Chief Financial Officer and Treasurer said, “Our current cash and liquidity position is strong, and we are pleased to complete this New Credit Facility on terms that will provide Beyond Meat with a greater amount of financial flexibility and better position the Company for long-term success. We appreciate the support of our lenders as this transaction lowers our cost of capital, is expected to support our future global growth initiatives and enables greater strategic flexibility. We remain committed to providing consumers around the world with great-tasting plant-based meats while contributing to important health, climate, natural resource, and animal welfare goals.” 

In April, Beyond Meat announced a deal with Starbucks, that will allow the company to sells its products to the coffee giants stores in China. It is believed that Beyond Meat could potentially partner with McDonald’s to sell its products through the fast-food chain. This deal would provide the company access to almost 40,000 restaurants worldwide causing a further spike in the share price.

Beyond Meat has also been able to set off lost sales to its restaurants from the increased grocery sales. With the relaxation of the stay-at-home orders in states, the company is hopeful that the restaurant based sales will begin to rebound.

The disruptions in the meat industry would give beyond meat a chance to fill the gap. Beyond Meat’s, plant-based alternatives would lessen the pressure on the meat industry during the COVID-19 crisis and thereafter. With people shifting to healthy alternatives and the advent of veganism, we can only assume that the revenues are gonna keep rising even after the pandemic ends.  Investors appear to be pricing the possibility of heightened growth into Beyond Meat’s stock price, leading to sharp gains in the stock prices.

 

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