By HVY Journalists: Beyond Meat is catching a lot of heat in the media lately for being a so-called “stock bubble.” The money-losing vegan burger maker has certainly gone absolutely parabolic since its IPO, and it’s easy to see why skeptics have a hard time understanding its rally.
However, a closer look at Beyond Meat’s fundamentals reveals that this stock is anything but a bubble.
1. Beyond’s Plant-Based Protein Is the Future
Sorry carnivores, the winds of change are a-blowing. If scientists can create a burger that looks, smells and tastes precisely like beef (and is healthier too), then there is no reason to run the costly enterprise of cattle farming. The next century may belong to the humble pea and not the cow.
Is Beyond Meat there yet? Of course not. Their Beyond Burgers aren’t necessarily a health food at all. It doesn’t matter though, as someone will get there, and when they do, it’s game over for Big Meat.
2. Wall Street Has No Filter
Wall Street traders would love to be more rational, but the fact is that when they think something’s a game changer, they would jump off a cliff to be the first to invest.
Piling money into disruptive technology is risky for retail minnows, but if you’re a multi-billionaire trying to preserve family wealth over the generations it’s essential.
What’s a $500 million loss here and there, when you know in 20 years you are in roughly on the ground floor of a market-shaking company?
3. Beyond Meat Stock Has No Public Competition
However, from an investing standpoint, this doesn’t help you very much if you want the liquidity of a public marketplace. Beyond Meat is the only game in town, and traders looking to profit from pea protein’s rise must buy up BYND shares – or risk being left behind.
4. Earnings? What Earnings?
While people like Warren Buffett steered clear of companies like Amazon at the start of the decade, widespread FOMO prompts the opposite reaction following a decade-long stock market bull run. Traders look less at the earnings ratio and more at the underlying technology.
“This downgrade is purely a valuation call, As we wrote last week, ‘At some point, the extraordinary revenue and profit potential embedded in BYND… will be priced in’ – we think this day has arrived.”
5. Socially-Conscious Equity Funds Love Beyond Meat Stock
Where finance was once solely about how much money you can make, the modern era has ushered in the socially-conscious investor. A rising contingent of vegans and environmentalist investors are looking for ethical stocks. Beyond Meat’s stance of disrupting both Big Meat’s attitude towards animals and its impact on the environment makes it attractive to both these demographics.
While Beyond Meat is a risky investment, don’t buy into the media’s portrayal that it’s all delusion. Big money sees the writing on the wall for the meat industry, and it wants in on the ground floor.
Disclaimer: This article is intended for informational purposes only and should not be taken as investment advice.