Evil Knievil: Beyond Meat – Gobble the future
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Beyond Meat (NASDAQ:BYND) is clearly way overvalued at $123 or circa $7.5bn. But when buyers are as irrational as this lot it is extremely dangerous to oppose the trend.
There is no patent protection for the substitutes to meat that are offered by BYND. Accordingly, as the competition catches up (they are all hard at it), price pressure will set in and BYND will hit a wall. As will the supply of stock to the market.
Vegetarianism is here to stay but there is nothing new about the idea. It is merely that currently the force is with it.
So prepare to borrow stock and then harvest the consequences of excess. It will take self control. If you like pop down to MacDonald’s and try the stuff as soon as it is available. When it is BYND will surely have peaked.
Hi Simon
I think you are wrong about Beyond Meat, as you were about FEVR when you wrote on June 16 2016 “I shorted FEVR at 730p. This is surely ridiculously overvalued.” I not sure you understand these modern brands or the scale of the markets they are addressing.
Yes $BYND valuation is extraordinary $80m sales and an $8b market cap but US gov meat subsidies are about $40 billion and “the meat industry contributes about $900 billion to the US economy.” So there is a lot of headroom!
Additionally the need (to produce plant based meat) is there, if the world populations demand for protein in “meat” form is to be met in a sustainable way.
Further they may or may not have a patent on the process but it has taken them years to get to this point and the science is incredibly complex, so there are significant barriers to entry.
Finally though not alone, they have first mover advantage and there is room for competition.
I do not hold, but suspect that I will very soon.
Kind regards
Michael Broom Smith.
Here is an interesting article on BYND where Aswath Damodaran concludes:
“The second is that selling short on a stock like this one (small, with a small float) is a dangerous game, since you are unlikely to have time as your ally, and while you may be right in the long term, you may bankrupt yourself before you are vindicated.”
http://aswathdamodaran.blogspot.com/2019/06/meatless-future-or-vegan-delusions.html