Beyond Meat Stock Prices Down By 22 Percent As Underwriters Announce Downgrade

Beyond Meat Stock Prices
Products from Beyond Meat Inc, the vegan burger maker, are shown for sale at a market in Encinitas, California (Photo: Reuters )

Shortly after it went public back in May, share prices for the plant-based meat substitute manufacturer Beyond Meat had exploded to record levels. Prices reached peaks of more than 500 percent of the company's original IPO, sending the company's market valuation well above $10 billion.

This was partly thanks to the massive hype behind the firm's products and excitement over the future of food in the United States.

That type of gain is of course not sustainable and it would only be a matter of time before it would drop and even out. This week seems to be the start of that downward trend as Beyond Meat share prices fell by as much as 22 percent.

The fall was preceded by an announcement from underwriters at JP Morgan, who had downgraded the stock's ratings. Underwriters apparently felt that this was the end of the stock's exponential growth and that it has already priced in.

According to JP Morgan analysts Ken Goldman, the stock is already way beyond the company's price target. JP Morgan cut the company's stock rating to "neutral" from being "overweight." Underwriters previously set the price target to $121 per share, which was then raised by $23 last week following a slew of upbeat forecasts.

This week, Beyond Meat stock prices dropped by 19 percent to $134.9, which was still well above JP Morgan's price target. Goldman explained that the massive surge was bound to stop and this week could be the start of the stock's correction. The analysts stated that the profit potential of the company will eventually be priced in.

Using its newly found capital gains, Beyond Meat announced this week that it will soon be launching a new version of its flagship vegan burger product. The new version will reportedly taste and look more like the real thing when compared to its previous offering. The new product is meant to steal the thunder out of Beyond Meat's competition, which includes offerings from companies such as Impossible Foods, Tyson Foods, and Nestle.

According to the company, the new version will imitate the marbling effect of fats that are found in real meat. The firm has also tweaked its formula to make sure that its product will perfectly imitate the juiciness and chewiness of real beef.

This was apparently achieved through the use of ingredients such as mung bean, rice proteins, and blended peas. The formula is completely different from the company's previous version, which used ingredients such as canola oil, coconuts, and pea protein.

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