Beyond Meat Stock Down 7% in September – Time to Buy BYND Stock?
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The price of Beyond Meat stock has gone down 7% so far in September following the resignation of its Chief Operating Officer Sanjay Shah earlier in the month.
The company did not disclose the reasons why Shah resigned after only two years at the firm although a temporary replacement has already been appointed to fill his shoes. Jonathan Nelson will now be taking over Shah’s duties until the company finds a new COO.
BYND fell over 3% on the date that Shah’s resignation was announced as the departure of top officials in up-and-coming companies like Beyond Meat doesn’t tend to be welcomed with smiles by market participants as it could result in delays and unwanted disruptions in the achievement of the company’s short and mid-term goals.
Can this event contribute to the continuation of BYND stock’s current downtrend? In the following article, I’ll take a closer look at the latest price action for the stock while also assessing the most recent developments affecting BYND’s fundamentals to outline plausible scenarios for the future.
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Beyond Meat Stock – Technical Analysis
Beyond Meat stock has been on a downtrend since January this year, back when the stock was one of the targets of the retail-led short-squeezing frenzy. However, so far this year, the stock has shed nearly 13% of its value as the company has experienced some setbacks in its efforts to promote the adoption of plant-based meat.
Notably, the demand from retail customers experienced a decline during the second quarter of the year and that appears to have spooked investors since, even though the company is getting more restaurants to incorporate its products into their menu, lower retail volumes may indicate that consumers are not entirely happy with the product.
Meanwhile, the resignation of its COO is further pressuring the stock downwards and that could lead to another tag of the lower trend line shown in the chart above.
So far today, the price of BYND stock is down almost 4% in pre-market action. If this negative performance spills over to the live session this would be the 7th losing session in the past 10 for the stock.
On the other hand, trading volumes have been particularly high lately and that could lead to an exhaustion of this recent negative momentum at some point. Moving forward, if the stock manages to bounce off this $110 level, the Relative Strength Index (RSI) would be posting a bullish divergence that could lead to a short-term rebound in the stock price.
However, if that does not happen, the outlook for BYND stock remains bearish with the low 90s being a plausible landing zone for the issue resulting in a 17% downside risk based on yesterday’s closing price of $110.8 per share.
Beyond Meat Stock – Fundamental Analysis
Beyond Meat has been growing its sales at an accelerated pace in the past five years as they have moved from $16.2 million to $406.8 million from 2016 to 2020 at a compounded annual growth rate (CAGR) of 124%.
The firm’s gross profit margins have been increasing to an average of 30% in the past few years but profits continue to be elusive as the firm needs to keep scaling its business to secure better margins to produce economies of scale.
In the past twelve months, the company has burned around $200 million in cash while Beyond Meat reported $1 billion in cash and equivalent by the end of Q2 2021.
For Beyond Meat, product adoption and scaling are two key goals to improve the performance of the business. In this regard, this latest setback in the demand for its products from retail customers may be a sign of trouble for the firm.
In March this year, the company issued $1 billion in 0% convertible notes. The proceeds obtained from these notes should be used by the company to scale up its manufacturing capacity and other similar projects.
For investors, it would be important to keep an eye on how these funds are deployed as that would be crucial to predict the future performance of the firm’s top-line results and profit margins.
At its current valuation of $7 billion, Beyond Meat seems to be reasonably priced based on its future prospects. However, a fair degree of uncertainty remains in regards to the management’s ability to execute key projects to achieve its ambitious goals and the resignation of its COO was without a doubt a negative development that could affect this.
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