Shares in Beyond Meat have lost their sizzle, with investors placing increasingly bearish bets on the company that launched one of the most successful public offerings in the US this year.
Equity analysts have been cautioning against an overheated share price since the plant-based meat substitute group’s stock soared after its initial public offering in May. Short-sellers now account for 47.2 per cent of Beyond Meat’s freely traded shares — the second-highest ratio in the Russell 1000 index of the biggest Us-listed companies, according to Bloomberg data.
Beyond Meat’s flotation coincided with rising consumer enthusiasm over plant-based protein alternatives. After a market debut at $25 a share in early May, the stock hit an intraday peak above $230 in July. But it has been downhill since. On Wednesday the stock slipped 8 per cent, dipping below $100 for the first time since June, and opened weaker on Thursday.
“We really think sentiment has been driving the share price rather than fundamentals,” said Arun Sundaram, analyst at CFRA. The independent research firm began covering the stock earlier this month with a “sell” rating.
Short sales of the stock have ballooned ahead of the expiry of the company’s so-called “lock-up period” on October 29, which will allow company insiders and pre IPO investors to start cashing out of their holdings for the first time. The El Segundo, California-based company is due to report third-quarter earnings a day earlier, after the bell.
Up to 48m shares, or about 80 per cent of the outstanding stock, are set to become eligible to be freely traded in the public market. Given the still-dramatic price rise since the IPO, many insiders and venture capital funds are expected to sell their shares, putting further downward pressure on the stock, said Mr Sundaram. The increased availability of shares in the market, in turn, is expected to make it easier for short-sellers to borrow the stock, he added.
