To Infinity and Beyond Meat – BYND?!

In seven short weeks after its Initial Public Offering (IPO) Beyond Meat (BYND) soared up to 700%: from $25 to $202. It may have made many new millionaires, but unless traders and investors can sell their shares and are not locked in for too long, it is likely BYND will experience the meat grinder (or since it’s veggie-based the juicer?!) for some time to come. Why?

Nine out of 10 times IPOs take one of two paths right out of the gates: 1) pop ‘n drop; or 2) drop ‘n pop. Examples of both are numerous (BABA, FB, FIT, GPRO, RACE, etc). These patterns emerge because when a company IPOs it has reached a certain (end of) a business cycle. This cycle is either (close to) a grand completion, which the pop ‘n drop scenarios suggest, or just a smaller degree cycle followed by a much larger (the drop and pop; as seen in Facebook -FB- for example).

So with BYND’s massive advance there’s most likely only one option left: #1. Simple compare the current advance with that of Fitbit, Inc -FIT- and GoPro, Inc, -GPRO- and you can see exactly what I mean.

FIT went from $20 to $52 (up 160%) and is now trading at $4.60 (down 77%) GPRO went from $24 to $98 (up 308%) and is now trading at $5.90 (down 75%). I can make many more comparisons, but for brevity this brings the message home.

BYND vs FIT and GPRO. Red dotted line shows my projected path for BYND’s share price over the coming years: well-below its IPO price.

Let’s do some math: Given BYND currently has a ~$10B market cap on only ~$88M revenue, while for example Tyson Foods, Inc. – TSN- has a ~$29B market cap, on ~$40B annual revenue, it would take BYND just shy of four years at a 100% compounded sales growth (!) to equal Tyson Foods on a Price/Revenue basis, while keeping price the same… Now if that sounds realistic and doable to you then why wait buying some shares?! I preferably would like to wait 4-5 years and re-assess the charts because “History doesn’t repeat itself, but it often rhymes” and there are simple too many similar cases out there that warrant caution.

Arnout, Ph.D.

Founder and President Intelligent Investing, LLC 
Vice President NorthPost Partners, LP

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