What are your thoughts on BYND? Its sales are up over 200% each quarter for the last 2 and will be profitable this year. It has pulled back to around 150 and bounced. I know it has a high valuation but since it has pulled back do you like it at this level?
Thanks, Paul
I know it has a high valuation but since it has pulled back do you like it at this level?
It might have had a quarter or two of high revenue growth, but we have to remember that is coming off a small base. And at a 55 P/S alot of expectations are built into the company. There are many more companies with great prospects, fast growth, high profit, and lighter business models that are trading for half of that or less.
So do I like it at this level? No.
I do not like it in a box. I do not like it with a fox. I do not like here or there. I do not like it anywhere, SamIAm.
Jeb
Just my humble opinion.
What are your thoughts on BYND?
All I can say is “Where’s the beef?”
https://www.youtube.com/watch?v=riH5EsGcmTw
Do they have a moat?
Do customers subscribe and get a couple of pounds delivered every week, like a SaaS customer?
Do they have patents that are “Impossible” to get around?
I guess there is a trend to pay more to eat healthier, such as the financially successful Whole Foods (oh, wait, Amazon had to bail them out).
So their product is actually more healthy – even with the very high sodium content?
Do they own their supply chain so they can ramp up production?
I had an Impossible burger ~2-3 years ago and didn’t really like it.
I had a Carl’s Jr Beyond burger a few weeks ago – it was not bad.
Long term to get mass adoption the price has to be less, not more than beef, IMO.
Mike
With all the interest around “subscriptions” and “recurring revenue” around SaaS, BYND basically has the same thing. Every time a Carl’s Jr. runs out of Beyond patties, they order more. There is no “starting each year with zero revenues” with BYND when you have deals with all these restaurants or retailers. Subscriptions, meanwhile, are not working well for the newspaper industry or some SaaS companies like NEWR currently. As we have seen, subscriptions can be cancelled.
Aside from trying to eat healthier and do such things as avoid cholesterol, there are a few environmental and ethical issues that younger generations in particular want to address that Beyond represents as a solution to. Beyond is working to make their product healthier, as well as improve upon their products to make them taste, feel, smell, and cook like real meat. The more Beyond improves upon it’s quality, the more it distances itself from competition, much like Budweiser or Coors are favored over Pabst or Old Milwaukee (even though they both sell regular old beer, the same thing some people brew in their garage as a hobby), or how Coca Cola and Pepsi fended of multiple competitors 100 years ago.
Meat is a $1.2 TRILLION industry worldwide. This allows something like plant based meat companies to scale to a large size very quickly.
Here are the quarterly results since they’ve gone public.
Q1: Net revenues were $40.2 million, an increase of 215%
Q2: Net revenues were $67.3 million, an increase of 287%
Beyond was already in Carl’s Jr. and Del Taco as of last quarter’s results. But since then, they have been added to the menu at Dunkin Donuts and KFC, both of which got a good initial reception. Del Taco has added BYND items to their menu. Subway was a more recent addition, but I have not read any results of initial interest there.
Much of BYND’s success last quarter was their huge increase in restaurant sales. Restaurant makes about 50% of their sales now, stores make the other 50%. They expect this mix to stay roughly 50/50 going forward. In addition, they say Q3 is their busy season because of summer BBQ season. However personally I expect the seasonality to be less pronounced as time goes on and restaurants become a larger portion of their sales.
Some say meat packers trade at low price/revenue multiples and have very low margins. But BYND is not a meat packer. It’s gross margins are over 30% now, and approaching their long term goal of mid-low 30s. Some will say that’s too low, but I don’t like to look at specific numbers in isolation and discard stocks. BYND is in a VERY LARGE industry. True, competition is coming. We see Nestle, Tyson, and a few others are working on plant based meat. Whole Foods has recently signed on a British company that makes plant based meat seasoning, though they are not in direct competition with BYND at this time. BYND is working on beef, sausage, bacon, and a few other things, that, if they can duplicate the look, taste, feel, and cooking experience one would get from real meat, while making it a healthy alternative, could potentially give them a moat. Beyond does not use GMO or soy, unlike Impossible Burger. If it were easy to do what Beyond is trying to do, either Beyond or Impossible most likely would have done it by now. The argument I have seen is that we just saw the hype with Sparkling Water, and the fleeting success La Croix had as a product of National Beverage a few years ago. Competitors moved in and sold their own Sparkling Water. I contend that Beyond is doing something more difficult than making sparkling water.
I held Beyond going into last quarter’s earnings. My thought was, not as a long term play, but a short term play, where worst case they don’t blow away earnings, but shorts would cushion any fall, as there is such a high amount of short interest in the stock (moreso going into last quarter) that many of these shorts would be eager to cover their losses. The stock traded up after hours after the earnings announcement, but then they announced a secondary offering, and the stock fell. The insiders could not wait 6 months and circumvented the lockup period via a secondary. At that point I sold because I could only see downward pressure on the stock. A few days later, the secondary was announced at $160 a share. The stock is currently trading around that, but, in my opinion, holding up quite well considering what happened. I believe this is partly due to the large amount of short interest in the stock, where, at some point, these shorts are going to eventually have to cover their short and buy the stock. I’m of the opinion this may have artificially held the stock up to levels above what I would like to enter at as any longer term play, given the uncertainty of Beyond. Namely, is it a fad, can they differentiate themselves, how big will the market be, how much of a bite will competition take out? These are unknown questions. Despite all this, I am short term optimistic about Beyond’s sales growth opportunities, and, insofar, competition (aside from their long time competitor Impossible) have made little to no inroads. They are still under development, and the market is for Beyond and Impossible to develop these deals at various restaurants.
Beyond has already said their supply chain is set for handling future growth, and outside companies have invested a lot of money in being able to provide ingredients that go into Beyond’s products.
Currently no position in BYND, but I recognize the huge potential they have and remember the large industry they are in.
Aside from trying to eat healthier and do such things as avoid cholesterol, there are a few environmental and ethical issues that younger generations in particular want to address that Beyond represents as a solution to.
Burt Beyond does NOT bring a solution to anything. There might some invisible environmental benefit that makes one trillionth of a percent difference for a dollar more per serving. But how long are people going to want to pay for that benefit? I think it is transient.
Beyond is working to make their product healthier, as well as improve upon their products to make them taste, feel, smell, and cook like real meat.
So the value proposition is you pay more for something that they hope to make equivalent?
The more Beyond improves upon it’s quality, the more it distances itself from competition, much like Budweiser or Coors are favored over Pabst or Old Milwaukee…
Budweiser and Coors have better marketing and distribution than Pabst and Old Milwaukee, but they are not favored in blind taste tests.
Meat is a $1.2 TRILLION industry worldwide. This allows something like plant based meat companies to scale to a large size very quickly.
C’mon 12x, you know better than this. The size of a market says absolutely nothing about a company’s ability to scale. That would be like saying that there 4 million road miles in the United States so that means Tesla can scale very quickly. The two have no relation.
Beyond was already in Carl’s Jr. and Del Taco as of last quarter’s results. But since then, they have been added to the menu at Dunkin Donuts and KFC, both of which got a good initial reception. Del Taco has added BYND items to their menu. Subway was a more recent addition, but I have not read any results of initial interest there.
These are good wins for BYND, I will give you that. But I am more interested in the staying power of the product in these restaurants. It isn’t enough to say Carl’s Jr. has agreed to carry the product. More to the point is the increasing of sales through these outlets every quarter. Staying power is the key.
True, competition is coming. We see Nestle, Tyson, and a few others are working on plant based meat. Whole Foods has recently signed on a British company that makes plant based meat seasoning, though they are not in direct competition with BYND at this time. BYND is working on beef, sausage, bacon, and a few other things, that, if they can duplicate the look, taste, feel, and cooking experience one would get from real meat, while making it a healthy alternative, could potentially give them a moat.
Competition is coming and more competition means commoditization. And that means LOW MARGINS.
Beyond does not use GMO or soy, unlike Impossible Burger.
There might be a small subset of people who care about no GMO, but are they enough to move the needle?
I held Beyond going into last quarter’s earnings. My thought was, not as a long term play, but a short term play, where worst case they don’t blow away earnings, but shorts would cushion any fall, as there is such a high amount of short interest in the stock (moreso going into last quarter) that many of these shorts would be eager to cover their losses. The stock traded up after hours after the earnings announcement, but then they announced a secondary offering, and the stock fell. The insiders could not wait 6 months and circumvented the lockup period via a secondary. At that point I sold because I could only see downward pressure on the stock. A few days later, the secondary was announced at $160 a share. The stock is currently trading around that, but, in my opinion, holding up quite well considering what happened. I believe this is partly due to the large amount of short interest in the stock, where, at some point, these shorts are going to eventually have to cover their short and buy the stock. I’m of the opinion this may have artificially held the stock up to levels above what I would like to enter at as any longer term play, given the uncertainty of Beyond. Namely, is it a fad, can they differentiate themselves, how big will the market be, how much of a bite will competition take out? These are unknown questions. Despite all this, I am short term optimistic about Beyond’s sales growth opportunities, and, insofar, competition (aside from their long time competitor Impossible) have made little to no inroads. They are still under development, and the market is for Beyond and Impossible to develop these deals at various restaurants.
WHOA! 12X this is way above my pay grade! I don’t get this detailed on my investments. I just try to buy good companies and hold long enough for them to out perform my personal limitations.
I have no position either, but I like watching.
Take care.
Jeb
I don’t own the stock. At some point I might.
Buddy owns a restaurant. I was in a few weeks ago and had a Beyond Burger.
His place is a full service restaurant, packed normally, a full menu of entrees, apps, small plates. Their burger has always sold well, but more known for their seafood.
The Beyond Burger with Vegan cheese was really fantastic. So I asked…how are they selling?
The answer…”well we only started last month because we were having s tough time getting a constant supply of Impossible Burgers, so we decided to try the Beyond Burger. Last month we sold 972 of them and it’s not on the menu”.
Well I was surprised, they were damn good, but that’s a lot of veggie burgers for a place that is known for its seafood. More then 30 a day. Wow.
He continued…”people love them, only problem is you just ate one of the last ones and I can’t get anymore product for at least a week”.
So it’s true, supply constraints are real. I think they discussed on their conference call.
They seem to not have enough capacity to meet demand.
I’m tempted to buy the stock. I was hoping for a selloff into the mid 120’s but so far it hasn’t happened.
I will not be at all surprised if they blow away estimates this quarter as well, but also talk about not being able to keep up with demand.
Trying,
You are in the SF Bay area, right? I wonder how that demand compares to Kansas… I am just back from 6 weeks in the U.S. The last week was in towns from San Jose to Menlo Park. The changes are mind boggling. Area on 101 and east to the bay is a boom town of office buildings for high tech companies. Couldn’t count all the Google buildings under construction. Point is, the people working there have different incomes, amenities, life style, and (I suspect) different values regarding environment and food. I am, however, intrigued by the possibility presented by Beyond. I’m fish and veggies, myself, so have veggie burgers in States. Fresh catch fish here in Philippines.
KC
Hey KC,
The location of this restaurant is in Portland. Progressive? Sure, but there are a heck of a lot of folks with disposable income that are more health conscious these days. Restaurant could have been anywhere from Atlanta to San Diego, to Portland, ME, to Vancouver.
As for the Bay Area, yea it’s a boom town, but so are parts of Los Angeles and NYC. At the same time go check out the streets near Googles main campuses where they are allowing homeless to permanently park their vehicles to live. Or Palo Alto along the perimeter of Stanford University. They even have a city task force that comes by to check on them, make sure they are all doing ok. In SF as well. Most are working, but they just cannot afford to pay rent anywhere. People are renting large tents placed in their backyards for over 1000.00 a month. Just a lack of housing for all the workers. It’s crazy.
So on one hand the economy is booming. On the other hand more and more people on the lower economic job scale are being left behind. The tops doing great, the bottom worse then ever.
Sorry, got off topic here.
There are enough folks making money to grow Beyond Meats business IMO. Hey look how many people can afford an IPhone. 