Prices for shares of Beyond Meat sank more than 20% on Tuesday as the lock-up period for early investors ended. The stock is down roughly 45% during October.
As the first plant-based burger company to go public, Beyond Meat became a stunning Wall Street performer, rising to a peak of $234.90 in late June after it went public at $25 per share on May 2. By Monday of this week the price had settled back to about $105 per share, still four times the IPO price.
Trading on Tuesday, however, was steady around the $84 mark, or about 20% below the previous day’s close. The decline, Wall Street analysts said, was the result of the end of the lock-up, the end of the six-month period of time following an IPO when large shareholders such as company executives and investors representing large ownership, are restricted from selling their shares. It’s a regulation that prevents such large shareholders from cashing in on early market swings.
Analysts said it was unclear whether any of the company’s early investors were among those selling in early deals, but it was expected at least some would cash in which was likely to weigh on the stock in the short run.
“Approximately 3/4 of the shares come unlocked today. What is less apparent, though, is the number of shareholders willing to sell with the stock down well over 50% from its high,” J.P. Morgan analyst Ken Goldman said.
On Monday, with the stock at $105, Beyond Meat’s valuation was $6.38 billion.
Of note was that Tuesday’s sell-off came after Beyond Meat announced its first ever quarterly profit and announced it had raised its full-year sales forecast. The company also said it would need to offer more price discounts to its products as competition in the category heats up.
On a call with investors Monday, Beyond Meat CEO Ethan Brown touted the fact the company’s products are now available in 53 countries around the world, and that he is excited about the partnerships the company has entered into. One of those includes a McDonald’s trial in Canada of the P.L.T. (plant, lettuce and tomato) sandwich. However, analysts were lukewarm to the success of the P.L.T., and note that just because McDonald’s is trying Beyond Meat doesn’t mean it will end up on the menu.
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By: Drovers