Beyond Meat Inc has missed quarterly earnings expectations due to higher costs, and said that executive chairman Seth Goldman will give up his executive status while remaining chair of the board.
The plant-based meat company said that deals with restaurants and retailers substantially narrowed its loss and boosted sales.
But Beyond Meat reported a one cent per share loss during the period, versus analyst expectations of a one cent profit, according to according to Refinitiv IBES data.
Beyond Meat has never recorded a yearly profit due to spending on R&D, marketing and its fast-paced international expansion. In the most recent quarter, the company's restructuring and some administrative costs were higher.
The El Segundo, California-based company struck several high-profile deals last year with fast-food chains, including McDonald's Corp and Dunkin' Brands Group Inc.
As consumers grow increasingly health-conscious and concerned about the environmental impact of industrial animal farming, the plant-based meat market is expected to expand to $140 billion.
The company's share price has risen four-fold since its IPO in May, but short sellers and many investors view the stock as overvalued following its massive surge, now trading at 232.8 times expected earnings.
"There were very high expectations for BYND going into this earnings release," CFRA Research analyst Arun Sundaram said. "However, we wouldn’t be surprised if the stock bounced back a bit tomorrow once the market opens."
"Seth Goldman's step down as executive chair is a bit shocking to us. You don't typically see one of the early pioneers of the company shedding responsibilities during the very critical growth stage of company," Sundaram said.
Goldman joined Beyond Meat as executive chair and as a member of the company's board in February 2013.
Beyond Meat's products are sold by grocers such as Walmart Inc and Amazon.com Inc's Whole Foods. Its deals with restaurants include Starbucks Corp's recent announcement that it will sell a Beyond Meat breakfast sandwich across Canada.
But while Beyond Meat races to sign on major global restaurant chains, there have been some signs of issues, including Canadian restaurant chain Tim Hortons dropping Beyond Meat's products from its menu, saying that they were not "embraced" by customers during a trial. Last month, Burger King began cutting the price of its Impossible Burgers, adding them to its value menu.
Initial feedback on the Beyond Burger has been largely positive, based on checks with some Ontario-based McDonald's currently testing the plant-based burgers in Canada, Bernstein analyst Alexia Howard wrote last month in a note. Howard said, however, that it seemed that the McDonald's trial had not yet been a blowout success that justified an immediate nationwide rollout across both Canada and the United States.
Net Revenue
Net revenue grew to $98.5 million from $31.5 million a year ago, beating estimates of about $80 million, in the period that ended on December 31. Beyond Meat said that it expects net revenue of $490 million to $510 million this year, which is an increase of 64%-71% from 2019, about in line with expectations. Beyond Meat's net loss narrowed substantially to $0.5 million, or a loss of one cent per common share.
"Cannibalistic Approach"
"We have a kind of cannibalistic approach to innovation where we're trying to take out our existing products and there's a lot of pride in doing that," CEO Ethan Brown said in an interview.
Narrowing Loss And Coronavirus Impact
Boosted by rising sales, the company's full-year loss has narrowed since 2017, even as it spends on a new facility in the Netherlands and is working to start production in Asia by the end of this year.
In recent months, the coronavirus outbreak has slowed manufacturing in China. Beyond Meat said that its goal remains to produce in the region by end of year, pending abatement of the coronavirus.
"We're looking, like everyone else, at when things are going to clear...but it's not something we're wringing our hands about it here," Brown said.
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