Beyond Meat sees share price suffer after it fails to match earnings estimates, but should investors be looking to sell the stock right now?
Nov. 11, 2021
Meat substitute manufacturer Beyond Meat (NASDAQ: BYND) announced a worrying earnings report yesterday that has seen its stock price subsequently tumble. The company announced a loss per share of $0.87, over double the $0.39 loss that analysts had expected to be reported. Revenue also underwhelmed, with the firm reporting $106.4 million against a forecast of $109.2 million.
These earnings misses have seen the company drop over 16% today at time of writing in a development that will have investors more than concerned.
Why does this matter to investors?
A whole host of reasons were given by the company for its Q3 earning woes. Weak grocery demand, dwindling orders from the foodservice industry, severe weather conditions, and distribution issues all got a mention as the company attempted to explain the failure to meet expectations.
Beyond Meat had expressed worries about lower than expected revenue to investors in adjusted forecasts last month. This declining outlook caused a stir amongst investors, as the initial outlook given in August had already raised concerns. Now, as their fears are made a reality, many appear to be jumping ship.
As we look ahead to the next quarter, outlooks remain relatively bleak for Beyond Meat as it predicts revenue to remain below estimates for the holiday season. CEO Ethan Brown attempted to allay fears for the stock by explaining that “the only reason we gave more tepid guidance on fourth quarter is just because we didn’t want to go through this again.” Brown continued by expressing that he is “very confident” about the resumption of strong growth for the company into 2022.
Is Beyond Meat a good investment?
Alarm bells are certain to be ringing in the minds of any investor currently holding Beyond Meat shares. Supply-chain issues, problems with sourcing labor, and a general weakening in demand for the company’s product are sure to be huge concerns moving forward. However, the company still holds promising deals with large chains such as McDonald’s and KFC which will hopefully see the company rebound well into the future.
Q1 of 2022 will tell an awful lot in the story of the company as it looks to finally navigate out of a highly unusual year. Beating already low estimates for Q4 would certainly be welcomed by investors, but a look to longer-term growth will be what sparks the most confidence. We’ll certainly be following the brand with heightened interest as it looks to regain its value in the new year.
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