There’s only way to describe the trading action of Beyond Meat (NASDAQ:BYND), and that is a wild roller coaster ride. The plant-based meat company went public at $25 per share in early May. In the five months since then, BYND stock has soared from $25 to $240 and then plunged from $240 to just over $100.
In other words, over the past five months, Beyond Meat stock has both increased by nearly ten-fold and dropped by more than 50%. Those are wild swings in a short time frame. For comparison purposes, over that same stretch, the S&P 500‘s biggest rally has been about 10%, and its biggest plunge was about 6%.
For now, the wild roller coaster ride of Beyond Meat stock is showing no signs of relenting. BYND stock is crashing heading into the company’s third-quarter earnings report, which is due out before the market opens on Oct. 28. Those numbers should be pretty good.
But very soon some BYND insiders and top shareholders will be able to sell their shares of BYND stock for the first time. At the same time, the company’s competition is heating up. But Beyond Meat is fighting off that competition with a lot of big-time contract wins.
So over the next 12 months, there are lot of potential positive and negative catalysts on the horizon for Beyond Meat stock. As a result, the extreme volatility which has defined Beyond Meat stock will persist for the foreseeable future.
But those investors who can see the forest through the trees and take a long-term perspective can see that Beyond Meat stock will not just survive the near-term volatility, but ultimately become a long term winner.
Consequently, investors should buy BYND stock at $100 with money they don’t need for a couple of years.
BYND Stock Will Remain Choppy in the Near-Term
Make no mistake about it. The volatility which has defined Beyond Meat stock since its IPO will persist for the foreseeable future. And, as the old saying goes, if you can’t take the heat, get out of the kitchen.
There will be a lot of the heat in Beyond Meat’s kitchen for the foreseeable future. First, the company is due to report its third-quarter results next Monday. Those numbers should be pretty good, since Beyond Meat won a ton of solid contracts during the quarter, including a major deal with McDonald’s (NYSE:MCD).
Taken together, those contract wins likely enabled the company to maintain its rapid growth. At the same time, management will probably be bullish about the outlook of the company’s food-service business.
After that, though, many insiders and employees will be able to sell their Beyond Meat stock for the first time, as the lockup on their shares will expire. They own the vast majority of the outstanding shares. If a big chunk of them decide to sell – and some certainly well, given how well the stock has performed since the IPO – then Beyond Meat stock could come under intense selling pressure. There will likely be strong selling pressure heading into that event, too, which could override the company’s likely strong Q3 earnings.
Thereafter, Beyond Meat stock is likely to trade wildly in response to every event, largely because most of its events today will have major long-term effects.
The wild days of Beyond Meat stock are far from over, and those who you can’t stomach its volatility should avoid the stock.
The Potential Long-Term Gains of Beyond Meat Stock Are Compelling
When it comes to Beyond Meat stock, I strongly urge multi-year investors to see the forest through the trees.
Here’s the forest. The global meats market (including retail and food-service channels) is worth $1.4 trillion and it’s growing. It’s rapidly pivoting from animal-based to plant-based meat. The non-cyclical and demographic trends spurring this pivot aren’t going anywhere anytime soon, mostly because environmental sensitivity, animal welfare, and a healthy diet are all very important to young consumers. Those young consumers will inevitably drive the bulk of meat consumption in a decade.
Thus, the plant-based meat market has huge growth potential over the next decade. Today, that market is worth $12.1 billion, less than 1% of the global animal-meat market. Plant-based dairy products, on the other hand, have a 14% share of the dairy market.
Nothing is preventing the plant-based meat market from reaching a similar market share one day. As a result, by 2030 plant-based meat’s market share can easily reach 10%. That could translate to $140 billion or $150 billion of plant-based meat sales in a decade, up 12-fold from where they sit today.
Beyond Meat will be an important player in that market. Sure, there are a ton of new players in the market, there’s a lot of competition, and the market’s long-term growth outlook is uncertain.
But Beyond Meat is one of the initial pioneers of the sector. As a result, Beyond Meat’s brand is quite powerful. Just look at the contracts Beyond has won. McDonald’s. Carl’s Jr. Hardee’s. The list goes on and and on. Everywhere consumers look for plant-based meat today, they find Beyond Meat.
From this perspective, Beyond has turned into the face of the plant-based trend, and I don’t think that will change anytime soon. Consequently, over the next decade, as the plant-based meat market grows by more than 1000%, Beyond Meat will grow by just as much, meaning that Beyond Meat stock is a long-term winner which will survive the near-term volatility
The Bottom Line on BYND Stock
Beyond Meat stock is a long-term winner that will continue to have bouts of volatility for the foreseeable future. So those who can’t stomach the volatility should stay away. But those who can handle the fluctuations should buy Beyond Meat stock on dips and hold it for the long haul.
Of course, valuation matters. At $100, Beyond Meat stock actually looks materially undervalued relative to its realistic long-term growth prospects.
That’s why I’m buying Beyond Meat stock around $100. At that level, its valuation its attractive, and its long-term potential is compelling.
As of this writing, Luke Lango was long BYND.
