Part of this shift happened without much intervention by management, as consumption in restaurants and other institutional foodservice outlets has plummeted since the spring, while at-home consumption has soared. While Beyond Meats stock performance is attractive to many momentum traders, investors with fiduciary responsibilities should consider the deteriorating fundamentals, weak prospects to compete at the scale of its competition, and the unrealistic increase in profits implied by the current valuation. Furthermore, Don Lee alleged significant concerns about food safety protocols concerning the raw materials that Beyond Meat sent. With sharp growth in revenues, margins have increased from -89% in 2017 to -9.4% over the last twelve months. Beyond Meats success comes partially from the fact that it has been able to evolve alongside or prior to consumer demand. People are able to do extensive research on problems after recognizing that there is an issue. Find out how 3 brands use customer data to find success! Furthermore, Beyond Meats current valuation implies it will generate sales equal to 29% of Tysons 2019 revenue a level that places it as thesixth largestmeat and poultry processor in the world in 2019. Consensus estimates expect revenue will grow 61% YoY in 2020, and just 17% YoY by 2025, per Figure 1. revenue grows at consensus rates in 2021, 2022, and 2023, and. More than simply providing a case study of a successful plant-based start-up, this analysis can provide your plant-based business with a complete understanding of the market. Sign up for our Newsletter to receive free, insightful tips on all things brand! A lot of that clothing ends up in landfills which proves that the product often matters more than the social cause a customer is interested in. Considering our revenue projections of roughly $1.1 billion and 6% margins, almost $66 million in net income is possible by 2023. There are countless advertisements with men barbequing burgers or hanging out with their friends as they bond over their favourite protein, read meat. Data by YCharts Kellogg ( K ) and Conagra ( CAG ) are already big established brands, that . Figure 6: Beyond Meats Adjusted EBITDA Misleads on Profitability, BYND Adjusted EBITDA Misleads On Profitability, Doing the Math: Valuation Implies Significant Disruption of the Entire Meat Industry. I would prefer Beyond Meat align executives interests with shareholders interests and link executive compensation with improving ROIC, which isdirectly correlated with creating shareholder value. Links: https://zaap.bio/lillytalavera. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . At its TTM FCF burn rate, the firm has enough cash to operate for just over 16 months before needing additional capital. Lets take a look at data from Germany. Beyond Meat stock has staged a dramatic recovery in January, rising by more than 50% since the end of last year. Beyond Meat ( NASDAQ: BYND) is streamlining its sales strategy, according to internal documents reviewed by the Wall Street Journal. revenue grows 24% a year from 2023-2027 (continuation of 2023 consensus), then. After tying up with Dunkin soon after its IPO, Beyond Meat entered China in 2020. How? The ideal candidate must have substantial knowledge and experience in counseling on marketing and advertising matters for food and/or beverage companies, including review of packaging, labeling, and promotional . Could they suit flexitarians, meat-eaters? Expired Meat: https://youtu.be/ZxCT_D6HBd8, https://www.forbes.com/sites/greatspeculations/2020/09/14/competition-will-eat-beyond-meat-alive/#9d646992946b, https://www.cnbc.com/2019/08/21/whole-foods-ceo-john-mackey-plant-based-meat-not-good-for-your-health.html, https://www.cnbc.com/2020/09/14/beyond-meat-is-launching-meat-free-meatballs-in-grocery-stores.html, Female Entrepreneur. This is the market drive for Beyond Meat. Resourceful, strategic, and self-directed leader with a proven record of achievement in global account management, business development and sales strategy leadership. The company's vision is for consumers to enjoy a meat-like taste and texture in their favourite dishes while avoiding the many chemicals used in processed meat and reducing the number of animals killed every year. Many undercover operations are conducted to get footage and investigate what is really going on inside the slaughter houses. Inside Beyond Meat's lab, where the company transforms plants into faux meat with microscopic analysis and robot mouths. In the first scenario, the estimated revenue growth rate is 61% in year one, 55% in year two, and 47% in year three, or equal to consensus. However, it hasnt always been smooth sailing for Beyond Meat in March 2019, Don Lee Farms filed a civil suit against its former business partner. There are limits on how much Kraft Heinz should pay for Beyond Meat to earn a proper return, given the NOPAT or free cash flows being acquired. In 2020, they even signed a deal to open another production facility in Shanghai! People tend to associate meat with strength, with muscles. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. Insider Trading and Short Interest Indicate Market Skepticism. Opinions expressed by Forbes Contributors are their own. In 2021 Beyond Meat's revenue increased by 14.2% to reach $464.7 million. But at this stage of Beyond Meat's growth, converting new customers remains the utmost priority. Leverage partners with larger platforms to expand reach. What can you learn from this? Focus Strategy- Beyond Meats strategy was to focus on creating meat that isnt actually meat, but tastes just like the real thing to replace meat in peoples diets. This pivot on management's part is undergirded by a continuing commitment to building out manufacturing and distribution capacity -- even in the middle of a pandemic, Beyond Meat more than tripled its capital expenditures in the second quarter against the prior year, to $26 million. However, given the low margins and overvalued stock price, I think it would be unwise for a larger firm to acquire Beyond Meat at current levels. Conference: 2021 3rd International Conference on Economic Management and Cultural . Beyond Meats massive revenue growth cannot last forever. The company launched the Impossible Burger in 2016. Heres a high-quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Nonetheless, Beyond Meat's earnings press release observed that the value packs, which hit grocery stores only in the last two weeks of the quarter, were responsible for 16 percentage points of volume growth for the entire period. I also assume Beyond Meat achieves an 8% NOPAT margin, which equals the average of Beyond Meats and Kraft Heinzs TTM NOPAT margins. With insiders quick to sell their shares and a large and growing short interest forming, it seems that others in the market are also unwilling to bet on the future hurdles Beyond Meat must clear. last yearwhere it will: develop, produce and market snacks and beverages made from plant-based protein bringing together Beyond Meats innovation expertise with PepsiCos marketing and commercial capabilities. PepsiCo is known for its marketing prowess and just working with PepsiCo will expand Beyond Meats reach. Each implied price is based on a goal ROIC assuming different levels of revenue growth. Prior to that Mr. Oghoghomeh served as Head of Recruitment Marketing - West Zone for Amazon, an eCommerce company from 2019 to 2021. In the second scenario, I use 61% growth (2020 consensus estimate) for all years to illustrate a best-case scenario where I assume Beyond Meat could grow revenue faster within the larger distribution network, resources, and customer base of Kraft Heinz. Beyond Meat went from very dark and meat-like packagings to a fresher and smoother look. At the end of 2Q20, Beyond Meat had $222 million of cash and cash equivalents on its balance sheet. Instead, they persevered. This would, in turn, take BYNDs market cap to about $14 billion by 2023, from $9.6 billion currently. Over the TTM period, FCF is -$164 million. Beyond Meat will face difficulty maintaining an innovative edge over its peers, who already spend much more on research and development (R&D). One of Beyond Meat's biggest and earliest investors was Tyson Foods, which had a 5 percent stake in 2016, later raised to 6.52 percent. Vegans and vegetarians, on the contrary, are often perceived as struggling to get enough protein and iron daily, as unhealthy weaklings. Brown. (Photo Illustration by Drew Angerer/Getty Images). Instead of drawing attention to a product that consumers didnt love, they simply discontinued it and slowly fazed it out of supermarkets. Ads like this are created to convert the masses instead of targeting a niche market. Over 2Q20, Beyond Meat removed $1.5 million (1% of revenue) in other expenses when calculating adjusted EBITDA. While vegans and vegetarians are less picky when it comes to whether or not meat substitutes really taste and feel like meat, regular meat-eaters are much more tricky to convince. Fourth Quarter 2021. word of mouth. It has put them in a competitive sustainable advantage position because others will have to spend a lot of money on research and development to get their plant-based burger to taste like theirs. Net revenues decreased 1.2% to $100.7 million in the fourth quarter of 2021, compared to $101.9 million in the year-ago period. And now the ravenous race for market share begins, with Beyond Meat and Impossible Foods (which has raised nearly $500 million in debt and equity) in prime position to . Additionally, Beyond Meat is introducing its plant-based meatballs in Coles, the second largest supermarket chain in Australia with over 2,500 stores. Beyond Meat Inc stock (NASDAQ: BYND), a leading-edge food company that produces meat directly from plants - an innovation that provides taste and texture of animal-based meat products along. Making the world smarter, happier, and richer. Even though the number of vegans and vegetarians was increasing in 2013 when the company launched its first products, the market for plant-based burgers was small: only 0.5% growth in this category. With a market cap of over $9.6 billion, the stock now trades a little over 17x projected 2021 revenues, despite the fact that 2020 was the toughest year for the company due to the pandemic and it also missed analysts expectations for Q1 2021. The Motley Fool owns shares of and recommends Beyond Meat, Inc. Figure 4: Expenses as % of Revenue: Beyond Meat 2Q19 vs. 2Q20, BYND Operating Expense As Of Revenue 2Q19 Vs. 2Q20. Economic earnings, which account for the unusual items on the income statement and . Jurgens brings over 20 years of experience with a proven record of growing sales and profit through strategy, branding, marketing, operational excellence and innovative approaches. For reference, Beyond Meats invested capital has increased by an average of $84 million (28% of 2019 revenue) over the past two years. To make the world smarter, happier, and richer. Now, if Beyond Meats revenues grow 2.7x, the P/S multiple will shrink by more than 60% from its current level, assuming the stock price stays the same, correct? With low margins and little control over the majority of distribution, I think shares can fall sharply from current levels. According to the company, this package of 10 plant-based patties reduces the price of its burgers from nearly twice that of conventional burgers to a 20% premium. Given that most plant-based protein products are now aiming for the same goal imitating the taste and texture of meat it stands to reason that as the plant-based protein market matures, differentiation between products will diminish as all products begin to taste more and more like meat. Competitors. To show that Beyond Meats protein is just good as alternative protein on the market the brand has partnered with NBA players like Kyrie Irving and Chris Paul who are not only brand ambassadors but are also investors in the company. Things Are Only Getting Worse for Beyond Meat Stock. The companys marketing strategy is multiple layers one and has evolved over time, to keep up with the market trend. Of course, this is wrong, and our body adapts to whatever we give it. Since its high-flying IPO at $46, this stock has soared to $135. One of the most notable adjustments was $11 million inoperating leases. The first six months of 2020 have visibly transformed Beyond Meat 's ( BYND -0.58%) approach to marketing its plant-based, meat substitute products. Also, because of technology, people are becoming more and more informed about problems with big brands and the cancerous chemicals used in products for decades. Beyond Meat Inc. BYND, -7.36% is revamping its retail sales strategy to center on five major grocers and hiring a new marketing executive as part of an effort to reinvigorate the plant-based food . Per Figure 6, Beyond Meat's TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. This makes a lot of sense since only2.7%of packaged meat sales in the United States are plant based. Theres no actual blood,instead beet juice isused but it does the trick. Without having that partnership in the beginning Beyond Meat may have floundered for many years trying to build a customer base on its own. The company has a culture of accountability among its employees: they are all responsible for driving up performances by making suggestions, pointing out what is not working.
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