Grizzle is the only equity research firm to correctly nail the epic Beyond Meat stock. We told you how hot this IPO was going to be before the first trade and we also told you that short sellers would get lit up after Q1 earnings. Check, check.
Right out of the gate this was a stock that was set-up to absolutely skewer Wall Street analysts and hedge funds alike, and that is what it has done in spades — the stock has ripped a monstrous 52% since its Q1 earnings release (and +500% since the IPO).
Beyond Meat – Share Price
Beyond Meat is trade-war immune and the broad investment landscape is growth-starved — interest rates will continue to grind lower. We stand firm in our view that shares of BYND will hit our near-term target of $190/share (our long-term target remains $1,100/share).
Wall Street Analysts Have Never got the Big Calls Right. Ever.
The Beyond Meat share price of $151.48 as of June 14 is 20% above the highest target price on Wall Street (Credit Suisse – $125). Bernstein and JP Morgan were the only two ‘Buys’ on the stock, both firms downgraded to neutral last week.
|William Blair||market perform||$91|
Analysts have been flat-footed on the stock ever since they initiated coverage, why should investors believe they understand this company now?
To put it completely bluntly the market simply doesn’t put any weight on their target prices or ratings. Their target prices chase the stock price, always have and always will.
Which Wall Street sell-side analyst nailed Google’s share price today from a decade ago? How about Facebook? None, zip, zilch, zero. Creativity and big-picture thinking are functionally non-existent on Wall Street and frankly, they’re not paid to get their calls right.
FT Alphaville highlighted an excellent BCA Research analysis looking at how “useless” analyst projections were over a 5-year period.
The fact that Grizzle is the only research firm with a buy rating gives us even greater conviction that we are spot on with our call.
Short Seller Bros — Unlimited Conviction Paired with Unlimited Losses
Short sellers have been utterly hypnotized by the lure of the big kill in Beyond Meat. Much of the nerd-loser Tesla short seller tribe have migrated to shorting Beyond Meat, it’s an absolute gift for those long the stock.
These keyboard trading bros love exuding faux alpha confidence irrespective of how much money they’ve lost on the trade. And it’s a doozy, according to S3 Partners Beyond Meat short sellers have mark-to-market losses of ~$400 million since the shares began trade — mind-blowing.
Short interest has modestly pulled back over the last week, currently 44% of the free float is short and the borrow fees are between 80-100%.
Ihor Dusaniwsky of S3 Partners believes we haven’t seen substantial short covering on BYND as yet, which technically leaves the stock exposed to another massive rip higher.
$BYND short interest $736 million; 5.21 million shares shorted; 44.21% of float; 98.10% borrow fee & easing with new stock borrows going between 80% and 95% fee. #beyondmeat shares shorted decreased by -283k, -5.16% over the last week as its stock price rose +42.1%. pic.twitter.com/m8V7t1mqmn
— Ihor Dusaniwsky (@ihors3) June 14, 2019
Shorts also have the joy of looking forward to Beyond Meat being added to the Russell 1000 Index during the annual index rebalancing on June 28. It’s always fun to be short a stock that will have built-in buying pressure from ETFs and other passive index trackers.
Beyond Meat vs. Tilray
Market pundits have full certainty in their belief that Beyond Meat is the Tilray bubble in redux, a hilariously misguided comparison to say the least.
Grizzle has been accurately covering the cannabis equity market for nearly 2 years. We know the Tilray bubble narrative all too well, in fact we outlined the short thesis to perfection last September. Shares have fallen -81% from the peak.
The Tilray bubble was driven by a lack of cannabis investment options for U.S. retail investors. There was nothing special or unique about the company itself. In fact, Tilray is one of the most loathsome companies in the sector, a private-equity creation with the sole purpose of milking the cannabis hype.
Beyond Meat is everything that Tilray is not, this is not a me-too plant protein company — they have defined and revolutionized the category. Their CEO is purpose driven and the company mission is nothing short of revolutionary. Beyond Meat’s sales growth is just starting to go parabolic, Tilray’s sales growth will likely be negative by year end.
‘Fierce Competition’ is Simply Non-Existent: Exhibit A – Tyson Foods
One of the go-to thesis points of short sellers is that magically dozens of competitors will appear with products that are identical to Beyond Meat.
Where were all these companies in the last 10 years while Beyond Meat and Impossible Foods took a commanding R&D lead in this vector? And what confidence do we have that they will be able to crack the code in 1-2 years?
Let me offer a window into the competitive landscape — Tyson Foods. Their answer to Beyond Meat’s hugely popular vegan burger is a ‘blended pea protein & beef’ burger — you simply can’t make this kind of stupidity up!
It’s a fact these boring ex-growth meat companies have no young talent within their ranks, this idiotic ‘blended meat’ idea would have been shot down in a half-second within any growth-oriented company. But at Tyson this genius vegan/meat idea kept getting elevated to the status of ‘killer app’.
In short we continue to believe that Beyond Meat will be bought by one of these big boring ex-growth food companies in less than 5 years, ideas like the hybrid meat-vegan burger make it so.
Last But Not Least — Jesus Doesn’t Like Fake Meat, Neither Should You!
When all else fails, one of the most reliable Hail Mary passes for short sellers is to dial a friend on the crazy Christian Right.
Pastor Rick Wiles outlines the satanic plot by the devil to ‘create a race of soulless creatures on this planet’ that feed exclusively on plant-based proteins like Impossible Burger and Beyond Meat.
— Thomas George (@thomasg_grizzle) June 15, 2019
If you liked our coverage of the Beyond Meat IPO, check what we’re saying about Slack’s direct listing.
In the interest of full disclosure, employees of Grizzle personally purchased and currently own stock in Beyond Meat. See the Content Disclosure section on our Terms and Conditions page for more details.
The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Grizzle hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.