After the peak of $239.71 on July 26 since its IPO, Beyond Meat (NASDAQ: BYND) stock is seen falling over 34% as investors are concerned about the future of the plant-based meat substitutes. The stock has climbed by 257% till July 26, but the downfall in the aftermath has reduced the overall growth to just above 122%.
Market analysts believe that people changing their lifestyle and becoming health-conscious might hurt Beyond Meat as its Beyond Burger doesn’t save on fat or calories. This year, plant-based meat has been the uproar in the market as more people have preferred meat alternatives instead of real beef or meat.
The company has forged strategic partnerships with certain leading restaurant chains backed by the growing popularity of plant-based fast food items. Last month, brokerage firm JPMorgan believed that the growing demand for meat substitute in the US will be driving the company’s sales in the near term.
The company’s outperformance has prompted a growing number of companies to enter the plant-based meat alternatives space with the goal of reserving a spot in the competitive supermarket aisle. The competition in the sector is likely weighing on Beyond Meat. In the competition, Beyond Meat is expected to invest heavily in innovation capabilities as well as in restaurants.
The operating expenses and capital expenditures are anticipated to increase in the foreseeable future as the company continues to invest to increase its customer base, supplier network, and co-manufacturing partners. Apart from this, the company will expand its marketing channels, invest in distribution and manufacturing facilities, and enhance technology and production capabilities.
The company’s market share could tremble due to a fall in prices of animal meat than plant-based meat. The competitors include Cargill, Hormel Foods (NYSE: HRL), JBS, Tyson Foods (NYSE: TSN), and WH Group, who have substantial resources than Beyond Meat and lower operational costs. The companies could offer conventional animal meat at a lower price than plant-based meat.
Meanwhile, market analysts believe that the pricing of meat alternatives could alter the frequent repeat purchasing decision of the consumers. They expect an overhyped possibility for growth achievement in the fake-meat market. The stock’s downfall is likely to continue at least in the near term.