Beyond Meat (BYND) represents a peek into the future of food, says one veteran of the grocery store industry. Just don’t try to pin him down on whether Beyond Meat’s extraordinary valuation is justified... at least for right now.
“Fundamentally you have a business here that is real and that is in the early innings,” former long-time Whole Foods CEO Walter Robb said on Yahoo Finance’s The First Trade. “They [Beyond Meat] have sales orders for the next two or three years in the fast food industry and the grocery industry.”
Order certainty is always a positive for investors to see, especially for an upstart such as Beyond Meat.
Robb served as co-CEO of Whole Foods, with founder John Mackey, for 25 years until 2016. Robb currently advises many up-and-coming food companies as part of a new firm called Stonewall Robb.
Beyond Meat’s market cap broke through the $10 billion level on Monday. Shares surged more than 25% on the session as the company introduced a new faux ground beef product at one Whole Foods location.
“I got early numbers [on their new ground beef product] this morning from Seth and they look pretty good,” Robb told Yahoo Finance, presumably referring to Beyond Meat executive chairman Seth Goldman.
But Beyond Meat’s stock plunged 19% Tuesday morning as one of the company’s lead underwriters — JPMorgan — slashed its rating on the stock to Neutral.
“At some point, the extraordinary revenue and profit potential embedded in Beyond Meat… will be priced in — we think this day has arrived,” JPMorgan analyst Ken Goldman said. The analyst added that Beyond Meat’s valuation requires assumptions he is not “comfortable” making yet.
Even still, Beyond Meat’s stock is up an insane 110% since its May IPO. Investors have wagered Beyond Meat turns a profit amid a barrage of new products in 2020. Optimism that the company will ink a deal with McDonald’s soon has also spurred the buying activity.
Brian Sozzi is an editor-at-large and co-host of ‘The First Trade’ at Yahoo Finance. Follow Brian Sozzi him on Twitter @BrianSozzi.
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