Beyond Meat falls after rapid sales growth fails to impress
Competition is growing in the faux meat market
Beyond Meat shares reversed earlier gains and fell in spite of reporting revenue that blew past analyst estimates — a sign investors may be looking for more than rapid sales growth.
The company’s fourthquarter sales of $98.5 million exceeded the highest analyst projection and helped push full-year revenue beyond expectations to $297.9 million. Beyond Meat forecast 2020 sales of $490 million to $510 million, also beating the average analyst estimate.
The company also said Seth Goldman would resign as executive chair, but would remain chairman of the board. It wasn’t immediately clear how Goldman’s role and responsibilities would change.
Chief Executive Officer Ethan Brown said the company is “only scratching the surface” of the U. S. restaurant market, but investors may be impatient for a bigger deal with a major player like McDonald’s Corp. Beyond Meat is in about 4% of the 650,000 U. S. restaurants, Brown said.
Competition is also growing as big-food players catch up with faux meat products of their own, so Wall Street may be pricing in slower gains following the rapid share gains of the past year.
Beyond Meat, along with rival Impossible Foods, also can’t ignore growing doubts about China — a key growth market — following the corona
virus outbreak. The virus has slowed Beyond Meat’s plans to start producing in China, Brown said, but it still expects to have production up and running in Asia this year. “The concern is more around reaction to it than the actual virus. The rate at which it’s actually causing people to die is not significant relative to other things out there so I think we need to put it in perspective.”
Beyond Meat has continued to strike new or expanded alliances with big restaurant companies. Starbucks said Wednesday it will start selling a Beyond Meat Inc.-branded sausage item in Canada, following a January announcement that McDonald’s and Beyond Meat were expanding their partnership there.
While its research and development spending did not keep pace with its revenue growth, innovation remains core to the business, Brown said. Beyond Meat is planning product launches in food service and retail, while work on bacon and steak continues, he said.
Beyond Meat, known for its volatility since its IPO last year, fell as much as 13% after an initial gain in late trading. The company’s shares have rallied more than 40% this year.