Shares of Beyond Meat (NASDAQ:BYND) experienced a 5.9% drop on Thursday, following a downgrade by Mizuho analyst John Baumgartner. The downgrade was attributed to a decline in sales and earnings expectations through 2024, causing the company to underperform compared to the S&P 500. Similar plant-based firms, including Oatly (NASDAQ:OTLY) and SunOpta (NASDAQ:STKL), have also seen substantial losses.
The high cost of plant-based meat, coupled with inflation, has been impacting consumer behavior. A significant portion of consumers, notably those from the Gen Z and Millennial demographics, have shown reluctance to repurchase Beyond Meat products after their initial trial. This trend has contributed to stagnant sales at fast-food restaurants.
InvestingPro Data reveals that Beyond Meat's revenue for the second quarter of 2023 stood at 356.82M USD, marking a decline of 23.03% from the last year. The company's stock price has also taken a hit over the last six months, with a total return of -39.78%, according to InvestingPro. These metrics align with the InvestingPro Tips that suggest Beyond Meat operates with a significant debt burden and is quickly burning through cash, making it a challenging time for the company.
In response to these market conditions, the projected 10-year outlook for U.S. plant-based meat sales has been revised downwards. The new projection stands at $7.6 billion, a decrease from the previous estimate of $9.4 billion. This downward revision has resulted in reduced shelf space for Beyond Meat products at grocery stores.
Furthermore, the company's revenue forecast for 2023 indicates a year-over-year decrease ranging from 14% to 9%. In spite of these challenges, Beyond Meat has implemented cost management improvements, including a workforce reduction by 19% and a decrease in net loss.
A recent Mizuho survey unveiled that environmental considerations account for one third of plant-based meat purchases. This trend could be subject to change under harsh economic conditions. On the other hand, InvestingPro Tips suggest that Beyond Meat's liquid assets exceed short term obligations, which could provide some financial stability in the face of economic downturns.
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