Beyond Meat; Round the World just to end up back at the start
Disclaimer
This is in no way, shape or form, fluid and function, an analytical, qualitative or intelligent compte rendu. There is absolutely no financial advice here because the only financial advice I can give is to research, research, and research. The purpose of this analysis is to serve as an example of an investigation into a company's background, fundamentals, and assets through various lenses to determine what is a good potential investment. The function of this write up is to serve as an educational resource for investors looking to understand how to find good investments. So read and learn some things about a company making burgers out of plants, converting a market towards meat-alternatives, and trying to survive.
Op-ed
What is the true cost of being early? Apple's iPhone line famously entered into the market in 2007, but before it the acute cynic might reference Microsoft's failed attempts earlier in the decade. While the historian might dig all the way back to Psion in 1984, anyone with a basic knowledge of BlackBerry and PDAs in general would know that Apple wasn't first in concept. Psion's cost? Perhaps ego, market capitalization, a real future, but in the billions of lifetime revenue, did Psion really lose? True, they will never get the clubhouse, their name left with the historian alone, but a final buyout of $200 million hardly feels like a cost.
For Beyond Meat, what is the true cost of being early? For the Founder and CEO, a net worth in the hundreds of millions, a multi-billion dollar publicly listed company, and a minor burnt-ego. Their investors pay a bigger cost, their ego burned with their money; but at their mid-October enterprise valuation of $10 billion, an 8-quarter average of $100 million in sales, maybe it was their ego and money to burn. Honestly speaking, this analyst has nothing but praise for Beyond Meat: One of the first companies to mass-produce a plant-based "meat" alternative. Paving roads and building bridges to supermarkets, dinner tables, Sunday grills, and restaurants. Taking the ethos out of meat substitutes from Wall Street to Main Street. Fast food and Local restaurant menu placements. Beyond Meat has done an amazing job, and should be truly proud of itself.
As the world starts to realize the true scope of the issues at hand, the known and unknown of a planet burning, meat alternatives will have a bigger and bigger market capitalization. The reasons for a drastically expanding market are many, ranging from labor, environment, processing, pollution, space, health, veganism/vegetarianism/animal ethicists, costs, etc., etc., etc. Even the sternest of doubters from a decade ago have to adjust their conviction as the overwhelming truth of the future roars. But maybe they can forever be resolute on Beyond Meat. Pointing to their failures is the same as pointing to their successes, how every company that came before did better, and how every company that comes after can fix it.
I can't believe it's not meat, except it tastes absolutely nothing like meat and the stress on the plant juice is… weird. The famous margarine used a catchy slogan, and one of the greatest models ever, to spread it's way through the 1990's, to nearly $300 million in sales in 2016. While any comparison between margarine and Beyond Meat's burgers would be a bit fatty, the contradictions are far more relevant. I Can't Believe It's Not Margarine has vegan, organic, lite lines, the same way Beyond Meat has various lines of plant, except it is owned by Unilever. Unilever, an international conglomerate of subsidiaries such as Lipton, Dove, Axe, Ben & Jerrys, had ~$58 billion in sales last year and sits with a Market Cap of just over $134 billion. This analyst would agree with any ethical argument for tearing Unilever apart, to what end? All of those subsidiaries break up just to go public and get their own absurd valuations? The technology and hope for Beyond Meat might certainly make the market hungrier, but when it has it's Monsieur Creosote moment, will anyone have thoughts and prayers for Beyond?
From established empires like Kellogg's, Nestle, Unilever, Tyson, to upstarts like Impossible Foods, Eat Just Inc., Mosa Meat, Meatable, Motif FoodWorks Inc.; Beyond Meat doesn't just have competitors, they have problems. Scientifically, Beyond Meat is outmatched. It's a veggie burger with veggie juice painted to taste as similar as possible to meat. Their competitors are doing Mass spectrometry to ensure that the protein composition of their lab cultured meats are identical to the butchered product. From there, they can scientifically alter the transcriptomic profile of the cell line to create a burger with the perfect consistency and taste, more nutrition than imaginable, all at the cost of growth media and printing. Beyond Meat takes vegetables and heavily processes them to be a cheap mimetic, a façade to their competitor's Mona Lisa. Product wise, the company could easily slurp up a start-up, with their $886 million in cash and cash equivalents from October's quarterly report, but then they lose their much needed runway.
Far afield from organic growth, Beyond Meat's business plan is unsustainable. Sitting at an average profit rate of ~33% through their birth of sales in 2018, a historical yearly operating expenses to gross revenue ratio of 4x, $886 million in cash is only going to get them through another ~6 quarters. Furthermore, the only reason they have any cash at all, and not BANKRUPT is a $1.1 billion convertible bond sale this year. What a great time to point out that an asset can be worth more dead than alive; if entity X were to short sell BYND infinitely, given market capabilities to do so, BYND is unable to sell their own shares to the market (removing that line of capital accruement), and any bank or institution willing to loan money is likely to look at their books and say no. This author is absolutely insinuating that debt-cycle News-hungry companies like Beyond Meat are being kept alive on the market as the means for both, a) book collateral for banks that run their ledger. And b) to be sold infinitely on the stock market knowing full well the company is illiquid and unable to reach profitability, such that they can pull the plug on the company itself if ever needed. Even after a possible hyperinflationary event of non-synthetic foods (which would especially hurt Beyond Meat since they use farmed plants), Beyond Meat has no road to profitability. Their overhead is ridiculous, their books aren't as creative so much as they are sad, and they have no good way out.
Pulling out just how much in sales Beyond Meat would need to hit for them to become profitable would be nearly impossible; their operating expenses seem to be derived from the true cost of goods produced, rather than the BS quote on a 10-Q. They lack the infrastructure pipeline to meet any massive increase in demand, which is fine since even they know demand isn't coming. From there, they are guzzling into their amortization pool, taking on more debt through leases and $104 million purchases in property, plant and equipment when all the optimism in sales for years net a measly $30 million quarter growth after 7 stale ones. Beyond Meat survives if they get to raise their profit margins, which would eat into their sales, at an $11.50/lb price tag at this author's local grocer. In many ways, companies like Beyond Meat reach profitability in hyperinflationary events (increased price in healthcare was met with an increased amount of healthcare industry - just not evenly); as commodity prices increase and butchered ground beef moves from $4/lb onwards towards double-digits now, and likely to reach higher as inflation ramps up, synthetic alternatives can go from unprofitable to profitable by artificially capitalizing on that hyperinflation without being in the same direct line of cost increases. If ground beef goes to $20/lb, Beyond Meat can afford to match and reach ~60% profitability, but that still wouldn't be enough. As their own costs increase, all that profit margin gets shrunk right back down. The only way hyperinflation helps Beyond Meat is cheaper money, which they will continue to need without massive deflationary manufacturing pressures. Except meanwhile, their competitors are grinding the axe and cutting into their market the whole time. Between the tortoise or the hare winning the race, they each get their rest. Beyond Meat will continue to combat meat alternatives and synthetics until the end, and as the field crowds, can they count on getting more and more private money and public eye?
There are times when a movement can be profitable, and profitability can be a movement. For a company that relies on an over-sized profit to earnings ratio, Beyond Meat's books are only going to keep moving it downwards. While cheap headlines emphasizing increases in sales might dupe the lazy eye, the true scope of the horror show of unprofitability is just a simple EDGAR search away. Within BYND's books may the investor's opinion lie, and one day, may Beyond Meat lay within the Historian's.
www.sec.gov/ix?doc=/Archi...
www.macrotrends...ncome-statement?freq=Q
Disclaimer
Thank you for your time, I truly value it, and hope that this brings value to it. This analysis is not to serve as primary financial advice, rhyme or reason. This work is to serve as an editorialized overview of the parts and pieces of the company, as well as the different ways this author analyzes them. As of the date of publication, 11/16/2021, this author has no investments in BYND's price, and will not ever make one. I absolutely abhor short selling, I think it should be banned for many, many reasons, and an Investment Strategy of Short is not to be taken as a suggestion to short Beyond Meat, I believe that it is up to their investors, and theirs alone, to ultimately decide the fate of the company, and that they alone have the right to sell an ownership percent in the company.
As the primary purpose of this article is to be informative of the company, the stock market, and relevant market mechanics, please feel free to ask any questions.
Thank you.
This is in no way, shape or form, fluid and function, an analytical, qualitative or intelligent compte rendu. There is absolutely no financial advice here because the only financial advice I can give is to research, research, and research. The purpose of this analysis is to serve as an example of an investigation into a company's background, fundamentals, and assets through various lenses to determine what is a good potential investment. The function of this write up is to serve as an educational resource for investors looking to understand how to find good investments. So read and learn some things about a company making burgers out of plants, converting a market towards meat-alternatives, and trying to survive.
Op-ed
What is the true cost of being early? Apple's iPhone line famously entered into the market in 2007, but before it the acute cynic might reference Microsoft's failed attempts earlier in the decade. While the historian might dig all the way back to Psion in 1984, anyone with a basic knowledge of BlackBerry and PDAs in general would know that Apple wasn't first in concept. Psion's cost? Perhaps ego, market capitalization, a real future, but in the billions of lifetime revenue, did Psion really lose? True, they will never get the clubhouse, their name left with the historian alone, but a final buyout of $200 million hardly feels like a cost.
For Beyond Meat, what is the true cost of being early? For the Founder and CEO, a net worth in the hundreds of millions, a multi-billion dollar publicly listed company, and a minor burnt-ego. Their investors pay a bigger cost, their ego burned with their money; but at their mid-October enterprise valuation of $10 billion, an 8-quarter average of $100 million in sales, maybe it was their ego and money to burn. Honestly speaking, this analyst has nothing but praise for Beyond Meat: One of the first companies to mass-produce a plant-based "meat" alternative. Paving roads and building bridges to supermarkets, dinner tables, Sunday grills, and restaurants. Taking the ethos out of meat substitutes from Wall Street to Main Street. Fast food and Local restaurant menu placements. Beyond Meat has done an amazing job, and should be truly proud of itself.
As the world starts to realize the true scope of the issues at hand, the known and unknown of a planet burning, meat alternatives will have a bigger and bigger market capitalization. The reasons for a drastically expanding market are many, ranging from labor, environment, processing, pollution, space, health, veganism/vegetarianism/animal ethicists, costs, etc., etc., etc. Even the sternest of doubters from a decade ago have to adjust their conviction as the overwhelming truth of the future roars. But maybe they can forever be resolute on Beyond Meat. Pointing to their failures is the same as pointing to their successes, how every company that came before did better, and how every company that comes after can fix it.
I can't believe it's not meat, except it tastes absolutely nothing like meat and the stress on the plant juice is… weird. The famous margarine used a catchy slogan, and one of the greatest models ever, to spread it's way through the 1990's, to nearly $300 million in sales in 2016. While any comparison between margarine and Beyond Meat's burgers would be a bit fatty, the contradictions are far more relevant. I Can't Believe It's Not Margarine has vegan, organic, lite lines, the same way Beyond Meat has various lines of plant, except it is owned by Unilever. Unilever, an international conglomerate of subsidiaries such as Lipton, Dove, Axe, Ben & Jerrys, had ~$58 billion in sales last year and sits with a Market Cap of just over $134 billion. This analyst would agree with any ethical argument for tearing Unilever apart, to what end? All of those subsidiaries break up just to go public and get their own absurd valuations? The technology and hope for Beyond Meat might certainly make the market hungrier, but when it has it's Monsieur Creosote moment, will anyone have thoughts and prayers for Beyond?
From established empires like Kellogg's, Nestle, Unilever, Tyson, to upstarts like Impossible Foods, Eat Just Inc., Mosa Meat, Meatable, Motif FoodWorks Inc.; Beyond Meat doesn't just have competitors, they have problems. Scientifically, Beyond Meat is outmatched. It's a veggie burger with veggie juice painted to taste as similar as possible to meat. Their competitors are doing Mass spectrometry to ensure that the protein composition of their lab cultured meats are identical to the butchered product. From there, they can scientifically alter the transcriptomic profile of the cell line to create a burger with the perfect consistency and taste, more nutrition than imaginable, all at the cost of growth media and printing. Beyond Meat takes vegetables and heavily processes them to be a cheap mimetic, a façade to their competitor's Mona Lisa. Product wise, the company could easily slurp up a start-up, with their $886 million in cash and cash equivalents from October's quarterly report, but then they lose their much needed runway.
Far afield from organic growth, Beyond Meat's business plan is unsustainable. Sitting at an average profit rate of ~33% through their birth of sales in 2018, a historical yearly operating expenses to gross revenue ratio of 4x, $886 million in cash is only going to get them through another ~6 quarters. Furthermore, the only reason they have any cash at all, and not BANKRUPT is a $1.1 billion convertible bond sale this year. What a great time to point out that an asset can be worth more dead than alive; if entity X were to short sell BYND infinitely, given market capabilities to do so, BYND is unable to sell their own shares to the market (removing that line of capital accruement), and any bank or institution willing to loan money is likely to look at their books and say no. This author is absolutely insinuating that debt-cycle News-hungry companies like Beyond Meat are being kept alive on the market as the means for both, a) book collateral for banks that run their ledger. And b) to be sold infinitely on the stock market knowing full well the company is illiquid and unable to reach profitability, such that they can pull the plug on the company itself if ever needed. Even after a possible hyperinflationary event of non-synthetic foods (which would especially hurt Beyond Meat since they use farmed plants), Beyond Meat has no road to profitability. Their overhead is ridiculous, their books aren't as creative so much as they are sad, and they have no good way out.
Pulling out just how much in sales Beyond Meat would need to hit for them to become profitable would be nearly impossible; their operating expenses seem to be derived from the true cost of goods produced, rather than the BS quote on a 10-Q. They lack the infrastructure pipeline to meet any massive increase in demand, which is fine since even they know demand isn't coming. From there, they are guzzling into their amortization pool, taking on more debt through leases and $104 million purchases in property, plant and equipment when all the optimism in sales for years net a measly $30 million quarter growth after 7 stale ones. Beyond Meat survives if they get to raise their profit margins, which would eat into their sales, at an $11.50/lb price tag at this author's local grocer. In many ways, companies like Beyond Meat reach profitability in hyperinflationary events (increased price in healthcare was met with an increased amount of healthcare industry - just not evenly); as commodity prices increase and butchered ground beef moves from $4/lb onwards towards double-digits now, and likely to reach higher as inflation ramps up, synthetic alternatives can go from unprofitable to profitable by artificially capitalizing on that hyperinflation without being in the same direct line of cost increases. If ground beef goes to $20/lb, Beyond Meat can afford to match and reach ~60% profitability, but that still wouldn't be enough. As their own costs increase, all that profit margin gets shrunk right back down. The only way hyperinflation helps Beyond Meat is cheaper money, which they will continue to need without massive deflationary manufacturing pressures. Except meanwhile, their competitors are grinding the axe and cutting into their market the whole time. Between the tortoise or the hare winning the race, they each get their rest. Beyond Meat will continue to combat meat alternatives and synthetics until the end, and as the field crowds, can they count on getting more and more private money and public eye?
There are times when a movement can be profitable, and profitability can be a movement. For a company that relies on an over-sized profit to earnings ratio, Beyond Meat's books are only going to keep moving it downwards. While cheap headlines emphasizing increases in sales might dupe the lazy eye, the true scope of the horror show of unprofitability is just a simple EDGAR search away. Within BYND's books may the investor's opinion lie, and one day, may Beyond Meat lay within the Historian's.
www.sec.gov/ix?doc=/Archi...
www.macrotrends...ncome-statement?freq=Q
Disclaimer
Thank you for your time, I truly value it, and hope that this brings value to it. This analysis is not to serve as primary financial advice, rhyme or reason. This work is to serve as an editorialized overview of the parts and pieces of the company, as well as the different ways this author analyzes them. As of the date of publication, 11/16/2021, this author has no investments in BYND's price, and will not ever make one. I absolutely abhor short selling, I think it should be banned for many, many reasons, and an Investment Strategy of Short is not to be taken as a suggestion to short Beyond Meat, I believe that it is up to their investors, and theirs alone, to ultimately decide the fate of the company, and that they alone have the right to sell an ownership percent in the company.
As the primary purpose of this article is to be informative of the company, the stock market, and relevant market mechanics, please feel free to ask any questions.
Thank you.