Beyond the meat (BYND) Shares soared in early trading on Wednesday after the plant-based foods group surprised investors with better-than-expected fourth-quarter sales and a strong outlook heading into the start of the year.
Beyond Meat shares had lost almost a third of their market value last year, falling to a record low of $5.58 in November, as the group struggled to maintain sales growth as input costs rose. and concerns were growing about the health of its fake meat products. increase.
In fact, analysts at TD Cowen warned investors late last year that the company faced “going concern” risks tied to the deterioration of its finances and described the company as being in “survival mode.”
Meanwhile, short sellers lined up to place bets against the group, with LSEG data suggesting that up to 40% of the group's outstanding shares were being used to bet that it would fall.
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Short sellers bet against a company by borrowing shares and selling them. If the stock price drops, short sellers buy back the stock at a lower price, return the borrowed shares (for a fee), and pocket the difference.
Short Squeeze to Make stocks Soar
That level of short-selling activity is largely why shares are soaring in early trading Thursday, as investors rush to buy back their shares following last night's better-than-expected earnings and a series of improvements from Wall Street analysts this morning. .
Beyond Meat's fourth-quarter sales fell 7.8% from the same period a year earlier to about $73.7 million, but that result was well above Wall Street forecasts and included a surprise profit of international markets.
Volumes rose 8% during the three months ended December, more than reversing the third quarter's 3.5% decline, but an aggressive price cut kept overall sales levels in negative territory.
However, Beyond Meat said sales in 2024 would likely rise to between $315 million and $345 million, with price increases and a renewed focus on cost reduction driving profit margins into the mid-to-high percentages.
“Over the past 12 to 18 months we have dedicated a lot of time, energy and resources to reorienting Beyond Meat's trajectory amid changing and challenging conditions toward sustainable operations and a return to growth,” CEO Ethan Brown told investors in a conference call Tuesday night.
“As we look to the future, we look forward to the first results of this extensive preliminary work, along with specific actions we plan to implement to strengthen our balance sheet, to make 2024 an important and promising year in the history of Beyond Meat,” he added.
John Oh, an analyst at global research firm Third Bridge, said the group's cost cuts, as well as the “rightsizing” of its overall business, were critical steps for the group's “survival mode.”
Beyond Survival Mode for Beyond Meat
“Additionally, Beyond Meat's recently launched Beyond IV platform bodes well for winning back the subset of consumers who previously abandoned the category due to negative perceptions about the health benefits of plant-based meats and concerns around listing of ingredients in Beyond Meat products,” he said. aggregate.
Other analysts were quick to adjust their Beyond Meat price targets in the wake of last night's gains and the stock's likely decline in early trading on Wednesday.
BMO Capital Markets analyst Andrew Strelzik added $3 to his price target, taking it to $10 per share, while Jefferies analyst Kaumil Gajrawala raised his to $8 from $7.
“We are cautious in our optimism,” Brown said. “We've obviously had some tough years, but by making these changes and creating a sustainable foundation for us to grow, we're going to create some room to execute and get back on track for growth.”
Beyond Meat shares are up 58.9% in premarket trading, indicating an opening price of $11.95 each.
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