What happened
Shares of plant-based meat company Beyond Meat (BYND 2.15%) soared on Thursday after the company reported financial results for the third quarter of 2022. But readers shouldn't believe that the market is celebrating Q3 results -- Beyond Meat stock was roughly flat in premarket trading. Rather, it appears the stock is gaining because of the broader market gains today. As of 1 p.m. ET, Beyond Meat stock was up 16%.
So what
In Q3, Beyond Meat generated revenue of $82.5 million, which was down almost 23% from the prior-year quarter. The company's net loss came in at an astronomical $101.7 million. And management lowered full-year revenue guidance from a range of $470 million to $520 million to a range of $400 million to $425 million.
NASDAQ: BYND
Key Data Points
Wall Street didn't mince words about Beyond Meat's Q3 results. Mizuho analyst John Baumgartner said the "path for recovery is daunting," according to The Fly. Bernstein analyst Alexia Howard noted that the company's price per pound was down more than 11% year over year, showing a lack of pricing power. Baumgartner lowered the price target for Beyond Meat stock by 59% to just $11 per share; Howard lowered the price target by 60% to just $10 per share.
CEO Ethan Brown struck a far more optimistic tone as he discussed Beyond Meat's attempt to become cash-flow-positive, saying management's decisions were "positioning Beyond Meat to endure and advance toward our long-term objective of being a major protein provider within the $1.4 trillion meat industry."
Now what
Beyond Meat is facing too many problems to briefly address everything here. But note that the company has negative $270 million in cash from operations just in the first three quarters of 2022.
Surprisingly, much of Beyond Meat's struggles have come from its partnership with PepsiCo for creating, launching, and distributing Beyond Beef Jerky. That said, not all of the company's cash-flow problems originate from this product line. Demand for its refrigerated products has also dwindled, leaving the company with many operational inefficiencies.
To me, that's the bigger issue here. Beyond Meat is facing a dubious path toward profitability unless demand picks back up and exceeds previous levels. While management can try to mitigate the damage by spending less, the fact remains that more consumers need to buy Beyond Meat's products if the stock is ever going to recover.
