According to FactSet data, over 2 billion shares of Beyond Meat changed hands on Wednesday, making it the second most traded stock in the U.S. market, with options trading volume hitting a record high. This surge was driven by news that Walmart expanded distribution as well as an initiative launched by retail investors on the WallStreetBets forum.Short squeezeThe company’s sales have declined for three consecutive years, and its stock plummeted 49% last week due to debt restructuring. Wall Street analysts remain skeptical, with no buy ratings assigned.
Once a star in the alternative meat sector, $Beyond Meat (BYND.US)$ is experiencing a frenzy of speculative trading. The troubled plant-based meat manufacturer’s stock surged as much as 112% during Wednesday’s session but erased all gains to close down 1.1% at $3.58, becoming the most volatile trading instrument in the U.S. market.
On Wednesday (October 22), the company’s share price surged by 112% at one point but gave up all its gains during the session, ultimately closing down 1.1% at $3.58. Nevertheless, the stock’s weekly cumulative gain still exceeded 450%. According to FactSet data, more than 2 billion shares of Beyond Meat changed hands on Wednesday, making it the second most traded stock in the U.S. market, with options trading volume also hitting record highs.
This surge was triggered by the company’s announcement on Tuesday that Walmart would expand its product distribution to over 2,000 stores, including the newly launched six-pack “value bundle.” Just last week, Beyond Meat announced a debt swap agreement that significantly diluted shareholders’ equity, causing its stock price to fall below $1 and hit an all-time low of $0.52 on October 17.
Despite the sharp rise in share price, Wall Street analysts remain skeptical about the company’s prospects. Currently, the stock has six sell ratings, five hold ratings, and no buy ratings. Matt Maley, Chief Market Strategist at Miller Tabak + Co., stated: “This absolutely indicates that the level of speculation and bubbles in the market remains extremely high.”
Retail Frenzy Returns: WallStreetBets Forum Becomes the Main Battleground for Trading
Beyond Meat has become the latest case in the resurgence of the meme stock craze. According to media reports, Roundhill Investments included Beyond Meat in its meme stock ETF this Monday, a fund specifically designed to track high-momentum, high-volatility stocks favored by retail investors.
The online investment forum WallStreetBets was flooded with numerous posts betting on Beyond Meat on Wednesday. “I will hold and buy more tomorrow! I already have 30,000 shares. Go for it!” one user wrote, with posts filled with exclamation marks.
According to Cboe Global Markets data, a record 1.9 million call option contracts changed hands on Tuesday. Among the most actively traded Beyond Meat options contracts recently, some bets were placed on the stock price jumping to $9 or even $40.
Some social media users are discussing a GameStop-style “short squeeze” action against Beyond Meat. As of the end of September, approximately 64% of tradable shares had been shorted. One user on the Reddit forum StocksToBuyToday wrote:
“This is not about becoming a millionaire investor or betting your savings. It’s about something much bigger: the power of the people. Hedge funds and big institutions bet on failure—not because they know the future, but because they think you won’t care.”
According to Business Insider, a trader named Demitri Semenikhin has been promoting the stock on social media, which may have further fueled the momentum in the stock price on Monday.
Has Walmart’s expanded distribution failed to restore confidence?
On Tuesday, Beyond Meat announced that Walmart would expand its product sales to over 2,000 stores, including the newly launched six-pack “value bundle.” This news provided a fresh boost for the rise on Tuesday.
AJ Bell’s head of financial analysis, Danni Hewson, stated:
“If sales follow through, the agreement to increase distribution is certainly positive, but looking at consumer sentiment towards meat substitutes, it is clear that Beyond Meat faces significant challenges. The current trading frenzy seems more related to short squeezes than a genuine shift in investor interest in the stock.”
This once-popular brand gained traction during the pandemic when more people turned away from meat towards healthier alternatives. However, this trend did not persist, and since then, the brand has struggled as consumers became increasingly concerned with over-processing, high costs, and taste issues.
Ethan Brown told analysts on the earnings call in August that the company hoped to counter misinformation surrounding its products and reduce prices. “There are these cultural moments that arise,” Brown said on the call, “and we happen to be on the other side of this particular moment.”
Hewson stated:
“Beyond Meat may still turn things around, but such a turnaround must be based on delivering high-quality products that recapture the initial interest, by aligning with current dietary trends and offering the kind of value-for-money that today’s consumers demand.”
From Star IPO to Troubled Times
Beyond Meat was once the darling of investors.
At its 2019 IPO, the company’s stock price doubled on the first day of trading, marking the largest first-day gain for a company raising over $200 million since the peak of the dot-com bubble. Enthusiasm for meat alternatives, along with partnership agreements with restaurant and supermarket chains, once pushed Beyond Meat’s valuation above $10 billion.
However, as sales growth slowed and the company continued to incur losses, investor confidence in the stock waned. In 2022, Beyond Meat’s share price plummeted over 80% for the year. For much of the past year, the stock has traded in the range of $2 to $4.
Currently, the company faces severe operational challenges. Annual sales have declined for three consecutive years. Amid inflationary pressures, Beyond Meat’s premium pricing has deterred some consumers, while growing consumer focus on protein has driven more shoppers to the meat counters at supermarkets.
According to media reports last year, in order to improve liquidity, the company had begun discussions with bondholders regarding a balance sheet restructuring plan.
Last week, Beyond Meat announced preliminary results of a debt-for-equity swap agreement, involving the issuance of millions of new shares, which caused the stock price to plunge 49% on October 13. The company’s founder and CEO, Ethan Brown, has resigned from the board.
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