By Amanda Gomez and Karen Kwok
(The opinions expressed are their own.)
NEW YORK/LONDON, June 7 (Reuters Breakingviews) - Beyond Meat is on fire. The meatless-burger maker reported first-quarter numbers only a hair better than it already estimated yet the stock, which had already quadrupled since its initial public offering a month ago, surged more than 15% in after-hours trading on Thursday, bringing its valuation to a whopping $6.8 billion.
Even taking that estimated revenue of $210 million for 2019, the latest market capitalization is 30-plus times sales. That's too hot. The firm led by Chief Executive Ethan Brown faces the typical challenges of a food company, including sourcing the peas and coconut and canola oils that it uses to make its versions of burgers and sausages, getting its products placed in grocery stores - it favors the meat counter, not the vegetarian section - and regulations.
Above all there's the potential for massive competition, from startup peers like Impossible Foods, which supplies Burger King , as well as from deep-pocketed traditional meat companies like Tyson Foods , which is planning its own alt-meat products after exiting an investment in Beyond Meat.
Yet it's easy to see why investors are eating it up for now. Beyond Meat is growing rapidly. The newly-public company said that it would break even on an adjusted EBITDA basis this year, earlier than expected. As the only listed play in its market, it's also, well, rare. The scarce shares may remain in high demand at least while it's the only item of its kind on the menu.
- Beyond Meat on June 6 reported net revenue in the first quarter of $40.2 million, up 215% year-on-year. The company's net loss for the period was $6.6 million. The results were slightly better than the upper end of the range the company had previously estimated in the final prospectus for its initial public offering.
- California-based Beyond Meat, which produces plant-based alternatives to meat, priced its IPO at $25 a share on May 1 and the shares started trading on May 2, more than doubling to close at $65.75.
- The market closed on June 6 at $99.50, but rose sharply in late trading after the company released its first-quarter report. At 5.20 p.m. EDT, they were trading at around $116, up nearly 17%.