Shares in Beyond Meat (NASDAQ:BYND) stock jumped 55% in pre-market trading despite a huge loss.
Reporters focused on management promises to cut costs and revenues that came in ahead of estimates.
But there may be a simpler explanation: a short squeeze.
Fintel reports that 37% of BYND stock is now held short, including 58% of that held off exchanges. BYND stock opened this morning at $11.60 per share, a market capitalization of about $750 million.
Squeezing Fake Meat
Beyond Meat was a big deal five years ago, as interest in “meat” that was made from plants but tasted like real hamburger soared. Shortly after it came public in 2019, the stock sold for over $230 per share.
But sales failed to live up to the hype. Revenue in 2020 hit $400 million and stayed there. Profits never appeared. The company’s loss peaked in 2022 at $366 million. Results for 2023 were not much better, with a loss of $336 million, $5.26 per share, and revenue falling to $343 million.
But this time, CEO Ethan Brown got the market’s message. “Our 2024 plan includes taking steps to steeply reduce operating expense, and cash use,” he wrote. The company will also raise prices to match its costs. In other words, Beyond Meat will cut costs to a figure below its expenses. It will try to make some money.
Analysts talked about “encouraging steps” and “right sizing the business,” saying Beyond Meat “needs to get in survival mode.” But Brown’s words were enough to convince some speculators to nibble on what is now a penny stock and the short squeeze was on.
BYND Stock: What Happens Next?
How long the squeeze lasts, and how high it goes, is an open question. What isn’t in doubt is that the value of BYND stock today is well beyond its current economic fundamentals.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
