Beyond Meat Stock Is Tumbling. Is the Meme Stock Rally Already Over?

In the past week, Beyond Meat (NASDAQ:BYND) stock has been a rollercoaster, skyrocketing from a low of $0.50 per share to a high of $7.69, a staggering 1,438% surge. This meteoric rise was fueled by a combination of factors: inclusion in the Roundhill Meme Stock ETF (NYSEARCA:MEME), an expanded partnership with Walmart (NYSE:WMT) to offer a new Beyond Burger 6-pack in over 2,000 stores, and Bank of America’s nod as a Reddit meme stock to watch.

The primary driver, however, was a classic short squeeze, with high short interest forcing sellers to cover positions, amplifying the rally. Yet, the euphoria was short-lived. Today, BYND is down almost 20% in morning trading, now below $2.90 per share. Does this dip signal the end of the meme-driven frenzy, or is there more volatility to come?

The recent surge in Beyond Meat’s stock price mirrors the wild swings of meme stocks like AMC Entertainment (NYSE:AMC) and GameStop (NYSE:GME). These rallies thrive on social media hype, often detached from a company’s fundamentals.

For BYND, the inclusion in the Roundhill Meme Stock ETF capitalized on online buzz, not operational success. Similarly, Bank of America’s watchlist mention echoes 2021’s volatility, when BYND soared before crashing 47% by year-end. These catalysts are fleeting, offering no lasting value. The Walmart partnership, while seemingly positive, doesn’t address the core issue: declining demand for plant-based meat.

Investors chasing these short-term triggers risk buying at inflated prices, only to face steep losses when the momentum fades, as history shows with other meme stock corrections.

Beyond Meat’s business fundamentals paint a grim picture. The company reported a 20% year-over-year revenue decline in the second quarter, missing guidance by 9%. Net revenues continue to slide, and losses pile up quarter after quarter.

The plant-based meat sector, once hailed as a game-changer, has lost its luster since BYND’s 2019 IPO peak above $200 per share. Revenues peaked in 2021 and have been on a downward trajectory since.

High production costs and razor-thin margins keep profitability elusive. Competition from Impossible Foods and traditional meat producers entering the plant-based space adds pressure. Inflation-weary consumers, prioritizing affordability over niche products, further dampen demand. The Walmart deal may boost visibility, but it’s unlikely to reverse these trends, as plant-based meat remains a niche market with limited mainstream appeal.

The short squeeze that fueled Beyond Meat’s rally is a double-edged sword. High short interest, combined with options-driven gamma squeezes, can send stocks soaring, as seen with BYND’s rapid surge in just three days. On one day, trading volume spiked to over 2 billion shares, dwarfing the average 37.7 million.

However, short squeezes are inherently unsustainable. Once short sellers cover their positions, the upward pressure vanishes, often leading to sharp declines. BYND’s 68% drop last week — triggered by a debt-swap deal exposing weak finances — is a stark reminder. Investors who buy in late, lured by the hype, risk being caught in a rapid downdraft when the squeeze unwinds, as prices can gap down dramatically.

Even if Beyond Meat rebounds again as Reddit traders rally around its shares, it remains a poor investment. The company’s valuation, propped up by speculative fervor, lacks support from its fundamentals. Declining sales, persistent losses, and a limited market opportunity signal that BYND’s current price levels are unsustainable.

History suggests it will eventually return to lower levels, as seen after its 2021 crash. Investors would be wise to avoid chasing this meme stock and instead focus on companies with strong, long-term growth prospects and actual profits. Stocks in stable sectors with consistent earnings offer better opportunities for sustainable returns. Don’t let the allure of a quick pop cloud your judgment: BYND’s fundamentals don’t justify the risk.