Shares of Beyond Meat slumped as much as 19 percent Friday after the faux meat maker signaled slowing demand at restaurants and grocers with a weak sales forecast, raising questions on whether its business is nearing saturation.
Sales of its plant-based meat fell at several fast-food chains in the third quarter, when the country was in the grip of the Delta COVID-19 variant and restaurants were cutting hours and trimming menus to battle a labor shortage.
At least 7 brokerages reduced the price target for the stock. Analysts believe that the company will continue to face a slowdown.
Stock fell 19% to $76.77 Friday morning. It rebounded to $81.45 by early afternoon, but was still down some 14 percent from Thursday’s close.
Beyond Meat on Wednesday forecast current-quarter revenue of $85 million to $110 million, well below estimates of $131.6 million.
“We view the results as further evidence that Beyond’s business is reaching market saturation faster than expected and that the company has deeper problems that won’t be easy to fix,” Credit Suisse analyst Robert Moskow said.
“Consumer interest in Beyond is simply reaching a peak.”
Three years back Beyond Meat’s sales growth and stock were on a tear, as popular fast-food chains, including Tim Hortons and Yum Brands’ KFC, and several retailers tied up with the company to sell its products.
However, the rapid pace of growth has come to a halt due to the pandemic as well the entry of more new players like Impossible Foods. The stock has also fallen 24 percent over the past year.
“With increased competition over the past two years, we’re seeing, as expected, some impact on our market share,” CEO Ethan Brown said on an earnings call.
He said that customers were less inclined to test out new products in the midst of the pandemic.
“Given the drop in revenues in Q3, a still-pressured Q4, revenue growth uncertainty in the near-term and into 2022 increases,” Jefferies analyst Rob Dickerson said.
“This was the quarter that likely broke the camel’s back.”