Beyond Meat Stock Down 9% in October – Time to Buy BYND Stock?

The price of Beyond Meat stock has declined nearly 9% in October following the sharp single-day decline that came after the company trimmed its revenue guidance for the upcoming third quarter of its 2021 fiscal year.

According to the management’s forecasts, sales are expected to now land at around $106 million compared to an initially expected range between $120 and $140 million. The company cited “a decrease in retail orders” along with a deceleration in the demand from foodservice businesses amid COVID-related disruptions.

Furthermore, Beyond Meat stated that its delivery capacity was temporarily affected by poor weather conditions, water damage, and the loss of potable water in a Pennsylvania facility.

This announcement comes to join other negative news including the unexpected departure of the firm’s Chief Operating Officer Sanjay Shah back in September.

Can the downtrend continue for Beyond Meat stock or is this decline marking a short-term bottom for the faux meat producer? In this article, I’ll attempt to answer those questions by analyzing the price action and fundamentals of the company.

67% of all retail investor accounts lose money when trading CFDs with this provider.

Beyond Meat Stock – Technical Analysis

Beyond Meat stock has been on a sharp downtrend since the stock started to shed the gains it saw earlier in the year on the back of the short-squeezing frenzy led by retail traders. Until last Friday, the year-to-date decline for BYND stock has extended to 23% upon reaching a fresh 2021 low.

Trading volumes were particularly high last Friday once news about this lower guidance came out with a total of 14 million shares exchanging hands – a figure that exceeded the 10-day average by nearly 7 times.

In a previous article I wrote for BYND stock back in September, I mentioned that the outlook for the stock was bearish upon performing a technical assessment and the downside risk was quite ample with the low 90s being a plausible short-term target.

Now that we have tagged the lower bound of the falling wedge formation shown in the chart, the next few sessions will be crucial if bulls want to keep the stock from falling off a cliff.

There is a confluence between the trend line support and the horizontal support highlighted in the chart as well and this increases the likelihood of a short-term bounce. If such a rebound takes place, the stock would still have to break above its short-term moving averages while also filling the bearish price gap left behind on Friday to possibly reverse the downtrend.

However, if the price breaks below $90 per share, the downtrend may accelerate significantly, possibly aiming for the low 50s in the mid to long term.

Beyond Meat Stock – Fundamental Analysis

If this weaker-than-expected revenue growth for Beyond Meat spills over to the fourth quarter, the firm’s growth rates will decelerate significantly compared to previous years.

Back in 2020, the company already displayed a slowdown in the rate at which its top-line results were expanding as sales grew 37% compared to the triple-digit growth rates exhibited in prior years.

Lower retail demand has been the primary cause for this deceleration and the market seems concerned that this might not be a temporary phenomenon.

In this grad, Arun Sundaram, an analyst for CFRA, stated: “In our view, BYND has yet to fully grasp the underlying issues impacting its results, particularly as it relates to differentiating Covid-related issues vs. the impact of rising plant-based meat competition and/or weak consumer demand due to either high price, disappointing taste, or health concerns”.

Meanwhile, a report from Morningstar’s analyst Rebecca Scheuneman stated the following about BYND stock: “We do not think the lower guidance implies that interest in plant-based meat is waning, and we maintain our view that these products play an important role in sustainably feeding the world and providing a way for environmentally conscious consumers to live their values”.

These conflicting views about BYND’s future are reflected in its ratings as well as 3 analysts have rated the stock a buy, 6 a sell, and 9 a hold. Meanwhile, the average price target for Beyond Meat stock stands at $110.5 per share with the lowest estimate standing at $70 and the highest at $140.

The company is currently being valued at $6 billion and has an enterprise value of $6.2 billion as well. This results in a forward EV/Sales ratio of approximately 10 which is not necessarily high for a company with promising growth prospects and a huge total addressable market.

However, considering that Beyond Meat is a money-losing company that is still fighting to promote the widespread adoption of its product, its valuation may remain quite volatile – especially if these temporary headwinds turn out to endure for longer than expected.

Buy BYND Stock at eToro with 0% Commission Now!