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Beyond Meat Shares Fall 20% Despite Solid Results as Insiders Rush to Exits



Ethan Brown, founder and CEO of Beyond Meat Inc., spoke during the Nasdaq MarketSite Initial Public Offering (IPO) in New York, USA, on Thursday, May 2, 2019.

Michael Nagle | Bloomberg | Getty Images

Wall Street was largely bullish on Beyond Meat after the alternative meat maker reported much higher profits than expected, but they warned that the basics may not matter now for a one-off initial public offering.

Tuesday is the first time since an IPO that insiders can sell stocks, which can cause short-term pressure, analysts warned. Approximately 75% to 80% of the remaining shares are available for trading after the closing date.

Stocks fell 20% to about $ 85 as investors expected a surge in domestic sales. At that price, the stock will decline by 65% ​​from the record level in the next day from $ 239.71

in July, as the alternative meat surplus reached fever.

"A lot depends on the amount of sales pressure over the next few days," said Ken Goldman of JP Morgan in a note to clients, where he raised his profit estimates for the next two years and maintained his overweight rating.

"If the expiration of the blockade in the past should eventually cause some investors to start buying the stock again, although

it is usually the founders, employees and early private investors who buy into a company before it become public, they are restricted to sell between 90 and 180 days. This is called a blocking period, which can cause a flood of insider sales and stock pressure.

"Despite solid results, investors are likely in initial the stage of making money from stocks that are still about 4 times after the IPO remains a drag in future trading sessions, "Barclays analyst Benjamin Teurer said in a note to clients on Tuesday.

Despite Tuesday sales beyond Meat stocks they are still over 230% of the May IPO, despite the pressure that stocks are currently seeing, Beyond Meat is a success story, reaching profitability through its third earnings report at a time when IPOs are being checked for bottom line.

CEO Does Not Sell

Beyond Meat on Monday exceeded analysts' expectations for fiscal and third quarter earnings. The company reported a profit of 6 cents on revenue of $ 92 million, while analysts forecast a profit of 3 cents on revenue of $ 82.2 million, according to Refinitiv. The company saw sales grow in both its food and restaurant departments, as its lean meats attracted more customers and kept existing customers coming back.

"In terms of profitability, the company reported a solid expansion in gross margin supported by greater operating leverage and productivity efficiency, as well as a fresh platform that generates higher levels of profitability," Theurer said.

Beyond that, it also raised its revenue forecast throughout the year, now expecting revenue in the range of $ 265 million to $ 275 million, up from an estimated forecast of more than $ 240 million, with many Wall Street analysts saying fourth-quarter management is t

Beyond Meat CEO Ethan Brown said he was not divesting himself after the blockade and focused on raising Beyond Meat to a $ 40 billion company in revenue. [19659002] "For employees their security around the circumstances they have if they need liquidity, "Brown tells CNBC's Squawk Box." I think early investors have their investors' mandate, what does their firm require? "

Overall, Wall Street views the blocking period as short-lived ene overhang.

– Reported by CNBC's Dominic Chu and Michael Bloom.


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