With both environmental and health concerns may be driving
its recent IPO surge, will Beyond Meat eventually make the Wolves of Wall
Street go vegan?
By: Ringo Bones
During the company’s first day of trading at Wall Street back
in Thursday, May 2, 2019, the share price of Beyond Meat surged 163 percent, thus
signaling surprising interest in a new generation of companies that are
creating plant-based alternative to meat. Beyond Meat, which makes vegetarian
burgers and sausages, began trading at $25 a share on the Nasdaq stock exchange
and ended the day at $65.75. The stock’s first-day pop is one of the biggest in
recent IPO history. In the last decade, only two other companies – both of them
biotech start-ups – had bigger increases on their first days of trading on
major American stock markets, according to the data from the University of
Florida professor Jay Ritter.
Beyond Meat is the first ever plant-based meat-alternative
company to go public, but it is part of a growing industry of start-ups looking
to replace animal agriculture. And in recent weeks have provided several
indications that the business is gaining traction largely because of growing
environmental and health concerns in both the raising and the consumption of
meat. A study conducted back in 2005 have shown that if all Americans reduced
their overall meat consumption by just 10-percent, the resulting reduction in overall
carbon footprint is akin to taking 20 million cars off the road.
Beyond Meat’s biggest competitor, Impossible Foods, teamed
up with Burger King to roll out a meatless-version of the Whopper sandwich last
month. Burger King announced this week that it would offer the sandwich at all
of its restaurants in the United States, after a trial in the company’s St.
Louis restaurants exceeded expectations. A day after Burger King’s
announcement, McDonald’s chief executive, Steve Easterbrook, told analysts that
his company was “paying close attention” to the trend and considering whether
it will develop a meatless alternative to its hamburgers. In the lead-up to the
Beyond Meat IPO, the poultry company Tyson Foods said it sold its early stake
at Beyond Meat, in part because the food conglomerate is developing its own
plant-based protein.
Like many high-tech companies that are debuting on Wall
Street this year, Beyond Meat is losing money - $30 million last year – but revenue
grew faster than last year’s losses, increasing 170 percent to $88 million. And
like its competitors, Beyond Meat pitched investors on the idea that its plant-based
burgers and sausages can appeal to traditional meat eaters and break out a
niche market that vegetarian alternatives have traditionally occupied.
The start-up, based in the Los Angeles area, has tried to
mimic the texture and taste of meat with ingredients like pea protein and beet
juice. But it has also argued for the environmental and health benefits of
moving away from meat. “I see it as a movement,” Beyond Meat’s chief executive,
Ethan Brown, said in an interview back in Thursday, May 2, 2019. “We’re tapping
into something within customers – within the human race – that is important.”
Beyond Meat’s products are available in 15,000 supermarkets and several
fast-food chains.
Leading up to the IPO, Beyond Meat steadily increased the
number of shares it planned to sell and the price where it projected the shares
to begin trading. The company ended up raising around $240 million in the
public offering, which is more than it had raise from private markets. When it
last raised money from its investors last fall, the company was valued at $1.35
billion, according to Pitchbook. Beyond Meat manage to finish the Thursday May
2, 2019 trading day to be worth $3.8 billion. The holdings of Beyond Meat’s
founder Ethan Brown, are now worth more than $200 million.
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