Beyond Meat Stock Down 19% Today – Time to Buy BYND?

Beyond Meat stock is down 19% this morning in pre-market stock trading action following the release of its financial results covering the third quarter of 2021 as the company’s guidance for the upcoming fourth quarter disappointed market participants.

For the three months ended on 30 September, Beyond Meat reported sales of $106.4 million resulting in a 12.7% year-on-year increase but missing analysts’ estimates of $109.2 million as per data compiled by Refinitiv IBES.

Demand in the United States continued to suffer in this quarter as sales in the country slipped 13.9% to $67.5 million. However, strong international sales offset this decline as they experienced a 142.5% year-on-year jump that was primarily driven by higher retail sales.

The company cited “lower overall demand” and operational challenges including “severe weather” conditions as some of the factors affecting its top-line results in the United States.

Meanwhile, adjusted gross profit margins for the period slipped by 730 basis points compared to the same period a year ago at 21.6%, primarily amid higher transportation and warehousing costs along with some inventory write-offs.

Net losses for Beyond Meat ended the period at $54.8 million compared to $19.3 million it reported in Q3 2020 while adjusted net losses per share ended at $0.87 compared to $0.28 reported a year ago. This figure was two times higher than Wall Street’s consensus estimate of minus $0.39 for the period as per Refinitiv IBES.

As a result of the current demand and supply-chain related woes, the company is experiencing, Beyond Meat guided for sales between $85 and $110 million for the next quarter. This figure was nearly $21.6 million lower than the consensus estimate.

From all standpoints, this was a disappointing quarterly report and it is the reason why Beyond Meat is dropping today as market participants are getting increasingly concerned about a deceleration in the rate at which the firm is managing to get its product adopted – particularly in the United States.

Can this pre-market drop result in the continuation of the current downtrend for BYND stock? Join me in this article as I take a closer look at the price action and fundamentals of this faux meat producer.

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Beyond Meat Stock – Technical Analysis

In my latest article about Beyond Meat stock, I highlighted that a break below the $90 level would make the situation worst for BYND as the confluence between the horizontal and trend line supports shown in the chart justified a short-term technical bounce.

Today’s pre-market action is pushing the price well below this level and it is pushing Beyond Meat stock to falling-knife mode as the next horizontal supports are found at the mid 50s and high 40s for a total downside risk of around 50% based on yesterday’s closing price of $94.5 per share.

If the pre-market downtick spills over to the opening as is, we would see the price dropping 24% below its 20-day simple moving average while momentum oscillators will plunge to their lowest levels since May this year.

Overall, the outlook for BYND stock is bearish and the downside risk is quite high.

Beyond Meat Stock – Fundamental Analysis

The most optimistic scenario now for Beyond Meat is that the company will generate sales of approximately $360 million by the end of the 2021 fiscal year. This will result in an 11.5% drop in the firm’s top-line results compared to a year ago and will be the first time the company reports negative annual growth rates in its history.

A deterioration in the demand for its products in the United States both from retail and corporate clients is particularly worrying and might be the most important factor driving the share price lower this year.

Excluding this morning’s downtick, BYND stock has shed 24.4% of its value thus far in 2021 while the decline may extend to nearly 39% if this pre-market decline spills over to the opening.

Meanwhile, a deterioration in the company’s gross profit margins is worrying they have declined 610 basis points on an adjusted basis compared to the same period a year ago.

Even though international sales are performing strongly, their contribution to the company’s profitability is lower amid the significant logistic costs associated with shipping BYND’s products overseas.

A 19% drop in BYND stock will push the market cap of the company to $4.84 billion. Using this figure, we obtain a P/S ratio of 13 for the business using its forecasted FY 2021 sales. This ratio is particularly high for a company whose top-line profit margins are deteriorating fast and creates room for further downside for BYND stock toward the end of the year.

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