Why Beyond Meat Stock Defied the Market Sell-Off on Thursday

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What happened

Shares of plant-based meat company Beyond Meat (NASDAQ:BYND) refused to go down with the rest of the market on Thursday. Instead the stock was up 9% as of 3 p.m. ET. By contrast, the S&P 500 was down 1.6%. As it turns out, a lot of people are betting against Beyond Meat stock. And recent developments may have them rethinking their positions.

So what

The Russell 1,000 index tracks the top 1,000 public companies in the U.S. Today, Bloomberg reported that Beyond Meat is officially the most shorted stock among these top 1,000. This means there’s a lot of bearish sentiment when it comes to Beyond Meat. And it’s not just retail investors who feel this way. Among 14 analysts tracked by TipRanks, only one would recommend buying Beyond Meat stock. Six recommend selling.

Image source: Getty Images.

However, Beyond Meat has recently reported that Beyond Fried Chicken is now available at Kentucky Friend Chicken (owned by Yum! Brands) around the U.S. after a lengthy development process. Prior to the announcement, Beyond Meat bears had started to assume this rollout would never happen. 

If successful, Beyond Meat’s chicken platform could catalyze growth, and that might be causing some short sellers to reconsider. To close out a short position, you have to purchase shares. And buying shares helps the price go up in the short term. That might be what we’re seeing today.

Now what

Through the first three quarters of 2021, Beyond Meat’s net sales are up 19% compared to the comparable period of 2020. However, the company’s net loss has widened considerably. Therefore, bearish sentiment from short sellers is understandable. 

Shareholders will hope that Beyond Meat management will have an optimistic forecast for 2022 when it reports financial results. Its fourth-quarter report is expected next month.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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