Stock Story -
What Happened: Shares of plant-based protein company Beyond Meat (NASDAQGS:NASDAQ:BYND) fell 18.4% in the pre-market session after the Wall Street Journal reported that the company is in talks with a group of bondholders to begin talks about restructuring its balance sheet. The talks are related to Beyond Meat's $1.1B convertible notes traded around 20 cents on the dollar, indicating investors' little faith in the company's near-term performance. The persistent cash burn recorded in recent quarters isn't helping matters either.
As a quick recap, BYND missed analysts' revenue (down 18% y/y) and adjusted EBITDA estimates when it reported Q1'24 earnings. The results revealed weaknesses in volumes (down 16.1%) and pricing (2.3%), highlighting the potential for more business headwinds down the road.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Beyond Meat? Find out by reading the original article on StockStory, it's free.
What is the market telling us: Beyond Meat's shares are very volatile and over the last year have had 51 moves greater than 5%. But moves this big are very rare even for Beyond Meat and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 5 months ago, when the stock gained 89.4% on the news that the company reported fourth-quarter results, which blew past analysts' revenue expectations.
On the other hand, its full-year revenue guidance missed analysts' expectations and its operating margin missed Wall Street's estimates. What seemed to be the saving grace and reason for the stock action, though, is the company's 2024 gross margin and implied operating profit guidance. Beyond Meat called for gross margin in the "mid to high teens range for the full year 2024", which is much better than Wall Street's projection of roughly 7%.
Additionally, the company's guidance called for a smaller operating loss than Wall Street expected. Overall, the results were fine, and the guidance was highly comforting.
Beyond Meat is down 21.6% since the beginning of the year, and at $6.42 per share it is trading 62.7% below its 52-week high of $17.20 from July 2023. Investors who bought $1,000 worth of Beyond Meat's shares 5 years ago would now be looking at an investment worth $37.71.
