Since its IPO last year, plant-based meat making company Beyond Meat Inc (NASDAQ:BYND) has seen its stock soaring to new highs despite widespread skepticism. However, in a surprising turn of events, it seems that the market expects the stock to keep rising despite the onset of the coronavirus pandemic.
Covit-19 pandemic Impact
The pandemic has resulted in the shutdown of restaurants all over North America, and while that has affected many restaurant stocks, the optimism around Beyond Meat remains undaunted. Hence, it could be worthwhile for investors to take a closer look at the company and the wider market.
It is now abundantly clear that restaurants are not serving as many customers as they used to before the lockdown. Most now offer a reduced service, and much of it consists of deliveries. However, Beyond Meat has not revised its year estimates so far. In this regard, it should be noted that one of the company’s peers, Impossible Foods, recently stated that there had not been any ‘fundamental disruption’ to its supply chain. That being said, it is necessary to keep in mind that Impossible Foods is a private firm and is not beholden to accuracy with regards to its numbers.
Despite the fact that the companies it supplies to like McDonalds, Dunkin Brands, and Del Taco, Restaurants experiencing declines in their stock prices, the Beyond Meat stock has actually gained. Hence, it has come as a surprise for most experts. The stock is expensive as well, considering it trades at ten times its future sales, and it is hard to see how it can maintain its 2020 targets while its buyers are struggling to meet theirs. The company is still unprofitable and has a net margin of 4% at this point.
However, most of the investors are optimistic about the future of plant-based meat. There is a belief that a correction in the stock might be coming, and once that happens, investors with a long term outlook could consider the Beyond Meat stock.