Beyond Meat cut its annual revenue forecast and missed second-quarter net sales estimates, as slowing demand for its plant-based meat products shows no signs of recovery.
Bogged down by inflationary pressures, customers are opting for lower-priced animal protein over meat alternatives such as plant-based products.
Health Benefits
The ambiguity around the health benefits of plant-based meat is also weighing on growth, CEO Ethan Brown said in a post-earnings call.
"This change in perception is not without encouragement from interest groups who have succeeded in seeding doubt and fear around the ingredients and process used to create our and other plant-based meats," he added.
Beyond Meat has been 'testing' price cuts to attract customers by offering its core products at a price point that is at or below their animal protein equivalent.
Revenue Forecast
The company forecast 2023 revenue between $360 million (€327.2 million) and $380 million (€345.4 million), compared with its prior expectation of $375 million (€340.1 million) to $415 million (€377.2 million).
Beyond Meat said it was unlikely to meet its target of achieving cash flow positive operations within the second half of 2023.
"The guidance cut is disappointing, especially considering the decent start to the year. We are now back to talking about cash burn and the need to raise capital... Something needs to change to prevent this ship from sinking," said CFRA Research analyst Arun Sundaram.
Quarterly Performance
Beyond Meat's quarterly net revenue fell nearly 31% to $102.1 million (€92.8 million), missing analysts' average estimate of $108.4 million, according to Refinitiv data.
However, easing supply chain expenses and its efforts to control costs helped the company post a smaller-than-expected loss of 83 cents, compared with estimates of 86 cents.
The US-based firm had said in October it would cut jobs, which was expected to lead to savings of about $39 million over 12 months.
Analyst Viewpoint
Commenting on the group's performance, analyst Russ Mould of AJ Bell said, “Highs above $200 seen in 2019 shortly after it joined the US stock market feel a long way off for plant-based meat substitute specialist Beyond Meat.
“After hours trading has pushed the shares below $14 as the company has reported an alarming drop in sales for its second quarter. The problem is its product is too expensive and people don’t really have the budget to look beyond the cheaper meat option right now.
“Question marks over the health credentials of its product and how processed it is are also a problem given a key driver for the increased adoption of vegan diets in recent years has been people looking to get healthier. Larger diversified food producers are also eating Beyond Meat’s lunch, launching their own plant-based products which, thanks to their scale, they can sell at more attractive price points.
“In its current state Beyond Meat looks an easier to swallow morsel for one of these competitors who may see continuing value in a brand which, after all, has an attractive supply agreement with fast food giant McDonald’s.”
