Is the Competition Taking a Huge Bite out of Beyond Meat’s Business?

Life hasn’t been easy recently for Beyond Meat (BYND -4.43%), once upon a time the big cheese in the alt-protein industry. Wednesday following market close, however, the company delivered another disappointing quarter, sending its share price hurtling south by almost 23% in after-hours trading. The company isn’t the only one of its kind on the market, and that’s affecting its performance.

Not so meaty

For its first quarter of this year, Beyond Meat’s revenue came in at $109.5 million. That was slightly over 1% higher than in the same period of 2021. While the volume of products sold rose at a 12% pace, this was offset by lower prices due to factors like trade discounts and foreign currency impacts from sales to non-U.S. customers.

The specialty food company breaks down its business into two customer segments (retail and foodservice) and two geographies (U.S. and international). Of the four total slots, only U.S. retail saw revenue growth, advancing by almost 7%. U.S. foodservice suffered a 7.5% decline while international foodservice dropped 8% and international retail fell by over 6%.

On the bottom line, the specialty food company saw its net loss deepen considerably. It amounted to just under $100.5 million, or $1.58 per share, from first-quarter 2021’s slightly more than $27 million shortfall.

Neither headline figure met analyst expectations, which on average were $112.4 million for revenue and only $1.01 per share for net loss.

In its earnings release, Beyond Meat quoted its CEO Ethan Brown as optimistically saying:

Though we recognize that the decisions we are making today in support of our long-run ambition have contributed to challenging near-term results, including a sizable though temporary reduction in gross margin as we took cost-intensive measures to support important strategic launches, we are confident in the future we are building while advancing our mission.

Everyone wants in

Beyond Meat isn’t confident enough to raise its guidance, however. It wrote that “Based on management’s best assessment of the environment today,” it’s reaffirming its forecasts for full-year 2022. This put net revenue at $560 million to $620 million, which represents at least 21% growth year over year; by comparison, 2021 revenue growth was 14%. No profitability estimates were provided.

Analysts tracking the stock are collectively expecting just under $589 million on the top line for 2022, which is almost exactly at the midpoint of the company’s range.

But investors don’t want young, ambitious companies like Beyond Meat to only hit financial projections — they want to see them exceeded. An encouraging top-line growth number would help, and that 1% bump during the quarter hardly qualifies.

Meanwhile, Beyond Meat continues to face ever-stiffening competition from both specialty alt-protein makers (the privately held Impossible Foods, for one), and old-school comestibles giants with deep pockets now playing this new game (Tyson and Hormel). Beyond Meat’s softness on pricing during the quarter is evidence of a highly competitive environment.

Meanwhile, alt-meats are no longer exciting novelty items on chain-store restaurant menus and supermarket shelves. On the back of this waning trend, and that continually growing competition, many investors are sending Beyond Meat stock back to the kitchen.