This is not by accident but instead by design. Beyond Meats successes have inspired the giants to create new categories. Beyond Meat stock has staged a dramatic recovery in January, rising by more than 50% since the end of last year. And now the ravenous race for market share begins, with Beyond Meat and Impossible Foods (which has raised nearly $500 million in debt and equity) in prime position to . Founder and Tech Inventor at Princess Technologies. Among the items Beyond Meat excludes when calculating its adjusted EBITDA are equity-based compensation, restructuring expenses, and a vague line item labeled other. If Beyond Meat created the healthiest plant based products that dont taste very good then it wouldnt be in business very long. This would be unreadable! 1. Sounds too good to be true, right? Beyond Meat went from very dark and meat-like packagings to a fresher and smoother look. And the organization continues to spill a slight amount of red ink, generating a loss of $10.2 million over the last three months versus a loss of $9.4 million in the second quarter of 2019. Beyond Meat Inc. is revamping its retail sales strategy to center on five major grocers and hiring a new marketing executive as part of .css-1h1us5y-StyledLink{color:var(--interactive-text-color);-webkit-text-decoration:underline;text-decoration:underline;}.css-1h1us5y-StyledLink:hover{-webkit-text-decoration:none;text-decoration:none;}an effort to reinvigorate the plant-based food makers business. While Beyond Meat could continue to rally, it faces four challenges that. The Double Distribution Canal: A Major Strength. Over the TTM period, FCF is -$164 million. With these headwinds Beyond Meat had to convince meat lovers that its products passed the test. For example, Kelloggs delayed the launch of its first round of Incogmeato products due to the COVID-19 pandemic. The plant-based food market will grow bigger and bigger every year. This all ended with Beyond Meats new look. Our goal is to give you the key to understanding Beyond Meats rapid success, to show you the hidden reasons for their success. Eating plants is the best thing you can do for your diet. Recent Improvement in Profitability Was Short-Lived. . But instead of doubling down and spending millions of dollars more to try and fix a product receiving a lukewarm response at best Beyond Meat chose to pivot. Each implied price is based on a goal ROIC assuming different levels of revenue growth. As investorsfocus moreon fundamental research, research automation technology is needed to analyze all the critical financialdetails in financial filingsas shown in the Harvard Business School and MIT Sloan paper,Core Earnings: New Data and Evidence. This has come from the increased consumer-knowledge on healthy products, plant-based diets, and understanding what goes into the food we as consumers eat. One venture capitalist even told Mackeythis: you know, John, I see you have got a pretty good business here, but it looks to me I looked at all the stores like you are a just a bunch of hippies and you are just selling food to other hippies and I dont think that is a very big market. He passed on investing in Whole Foods and ten years later that very same venture capitalist told Mackey that not investing in Whole Foods was the worst decision he had ever made. Plants come directly from the sun and reap the energy created from the sun. (Photo Illustration by Drew Angerer/Getty Images). Full Year 2020 Financial Highlights1. Figure 7: Current Valuation Implies Drastic Profit Growth. All rights reserved. In 2021 Beyond Meat's revenue increased by 14.2% to reach $464.7 million. If yes (which is the most common case), you can sell them to way more people and have an even greater impact. Marketing News & Strategy Here's how KFC is marketing its updated Beyond Meat faux chicken in two markets Beyond Fried Chicken could go national if strong results are seen in Charlotte and. on July 4th, eating a hot dog with your family. So, what can you learn from Beyond Meat's marketing strategy? Over the TTM, Beyond Meat removed $23.7 million (6% of revenue) in share-based compensation and $7.5 million in restructuring expenses (2% of revenue) when calculating adjusted EBITDA. Resourceful, strategic, and self-directed leader with a proven record of achievement in global account management, business development and sales strategy leadership. The company launched the Impossible Burger in 2016. Even with that success, Brown continues to think big . In fact, it has been shown that heart disease, cancer, and diabetes, three of the top ten causes of death, are linked to eating too much meat. Continue reading your article witha WSJ subscription, Already a member? Nope, its just Beyond Meat. This article will take a deep dive into Beyond Meats journey to success and provide some tips other brands can use to fuel their own growth stories. It looks like meat, tastes like meat, and even feels like meatbut its made entirely of plants. Meditation apps have seen a boom in popularity over the past few years in the US but does their growth extend to Europe? Entrepreneur, retail expert, strategy consultant and author. While many consumers are not willing to pay an average of $3 more a pound for a. Before joining Beyond Meat, Mr. Oghoghomeh served as Senior Vice President, Brand Marketing at Red Bull from 2021 to February 2023. In this scenario, Beyond Meat grows NOPAT by 36% compounded annually over the next decade and the stock is worth just $44/share a 67% downside to the current price. Figure 11 shows the implied values for Beyond Meat assuming Kraft Heinz wants to achieve an ROIC on the acquisition that equals 6%. The Motley Fool owns shares of and recommends Beyond Meat, Inc. While Beyond Meats stock performance is attractive to many momentum traders, investors with fiduciary responsibilities should consider the deteriorating fundamentals, weak prospects to compete at the scale of its competition, and the unrealistic increase in profits implied by the current valuation. It is better to create a plant-based meat product, not only because of meat expiration issues, but bacterial issues with animals, mad cow disease, and so many other factors that clearly make eating plants natural to humans and such a better option. This assumption is highly unlikely but allows us to create best-case scenarios that demonstrate how high expectations embedded in the current valuation are. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. + Follow. 2 Reasons to Avoid a Roth 401(k) for Your Retirement Savings, Warren Buffett's Latest $2.9 Billion Buy Brings His Total Investment in This Stock to $66 Billion in 4 Years, Want $1 Million in Retirement? But at this stage of Beyond Meat's growth, converting new customers remains the utmost priority. Beyond Meat Inc stock (NASDAQ: BYND), a leading-edge food company that produces meat directly from plants an innovation that provides taste and texture of animal-based meat products along with nutritional benefits of plant-based products has seen its stock rise by over 160% from the lows seen in March 2020. Below are specifics on the adjustments I make based on Robo-Analyst findings in Beyond Meats 10-Q and 10-K: Income Statement: I made $33 million of adjustments, with a net effect of removing $21 million innon-operating income(5% of revenue). Nonetheless, Beyond Meat's earnings press release observed that the value packs, which hit grocery stores only in the last two weeks of the quarter, were responsible for 16 percentage points of volume growth for the entire period. Nowadays, certain celebrities do more than advertise for the brand, some have become ambassadors for Beyond Meat, such as Byrie Irving, from the Boston Celtics. By July 2019, Beyond Meat could claim a market value of $11.7 billion which was a huge increase from its pre-IPO valuation of $3.8 billion. Acquisitions completed at these prices would be truly accretive to Kraft Heinzs shareholders. Instead, it avoids labelling its products as vegan even though they are. Research on Beyond Meat's Profitability Problems and Strategies. Considering these competitors are already supplying plant-based protein products, Beyond Meat faces an increasingly uphill battle to reach the size it needs to match the cost efficiencies of larger competitors like these two established firms. There are limits on how much Kraft Heinz should pay for Beyond Meat to earn a proper return, given the NOPAT or free cash flows being acquired. strategy uncovers and shares the "bold vision, . Moreover, the existing plant-based burgers had a disastrous reputation, they were ironically said to have as much flavor as the box they were in. Beyond Meat had to position itself as different from them as possible. Beyond Meat was originally founded in 2009 by Ethan Brown, who worked with two University of Missouri professors, Fu-hung Hsieh and Harold Huff, to develop meatless, plant-based protein. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. Create a great product. We believe Beyond Meat Revenues have the potential to rise close to 2.7x from the level of $407 million in 2020 to $1.1 billion by 2023, representing a growth rate of roughly 40% per year (for context, the compounded annual growth rate was a very healthy at 164% between 2016 and 2019). Conference: 2021 3rd International Conference on Economic Management and Cultural . Weve tried to run straight at the question: is a plant-based meat sufficient for humans to be vital and robust,saysBrown. Critical Details Found in Financial Filings by My Firms Robo-Analyst Technology. Beyond Meat stated that its mission is to push boundaries and disrupt. Vegans and vegetarians, on the contrary, are often perceived as struggling to get enough protein and iron daily, as unhealthy weaklings. A lot of people are trading so I know a lot of people are interested in the future of this company. Plant-based burgers have existed for decades before Beyond Meat. They did not service the vegan and vegetarian markets as traditional players did. illustration, packages of Beyond Meat "The Beyond Burger" sit in a refrigerator, June 13, 2019 in the Brooklyn borough of New York City. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. I conservatively assume that Kraft Heinz can grow Beyond Meats revenue and NOPAT without spending any working capital or fixed assets beyond the original purchase price. After adjusting for this liability, I can model multiple purchase price scenarios. Though the firms revenue has improved from $298 million in 2019 to $401 million over the trailing-twelve-months, Beyond Meatscore earnings[1]have fallen from $6 million to $4 million over the same time. They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. Even though the firm doesnt necessarily hold logistical or technological advantages over its competitors, I think it helps to quantify what, if any, acquisition hopes are priced into the stock. Furthermore, Beyond Meat has a history of significant free cash flow (FCF) burn that is unlikely to change anytime soon. Eating meat has long been associated with masculinity. Now, if Beyond Meats revenues grow 2.7x, the P/S multiple will shrink by more than 60% from its current level, assuming the stock price stays the same, correct? The promises of Beyond Meats burgers: they produce 90% less greenhouse gas emissions and require 93% less land, 99% less water, and 46% less energy than a traditional beef patty. Looking ahead to 2021, consensus earnings estimates are a much higher $0.47/share. More and more meat-eaters and flexitarians are looking to plant-based products to offset their carbon footprints and help them live a more sustainable lifestyle. The mission of the company is focused on plant-based meat alternatives, using pea and other plant protein isolates. While I chose Kraft Heinz, analysts can use just about any company to do the same analysis. This is very rare: imagine if menus displayed all the product brands they use to cook the dishes you eat. While I think a plethora of competitors have already developed a competing product, its plausible that a competitor could decide to buy Beyond Meat rather than continue building its own plant-based protein brand. First of all, think of the big picture when it comes to segmentation: who will really buy your products? By shifting from animal-based meat to plant-based meat, we can positively impact four growing global issues: human health, climate change, constraints on natural resources and animal welfare. Beyond Meat Is Down 93% From Its High. In the first quarter of 2019, Beyond Meat's first as a public company, its gross profit was just 26.8% of net revenue. The organizational goals have to be settled and explained. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently. Over the past twelve months, insiders have purchased 700 thousand shares and sold 4 million shares for a net effect of 3.3 million shares sold. For example, Kelloggs delayed the launch of itsfirst roundof Incogmeato products due to the COVID-19 pandemic. When it comes to social causes brands still need to remember if the product isnt good no social cause, no matter how important can save it. The original packaging did not display vegetables, and the words meat and best in the products names were not chosen randomly. Figure 3 shows Beyond Meat spends 37% of its revenue on operating expenses (SG&A, R&D, and restructuring costs), which is well above peers. With the high expectations of consumers and the competition they were about to create, knowing that they got in during the right time when consumers would take it as a positive and embrace this new way to eating meat, or meat substitute..