Beyond Meat, Inc. [NASDAQ: BYND] is causing ripples in the market. The stock shot up by over 100% on its debut in the market. However, this excitement is not without basis. The company’s revenues have grown by over 100% year-on-year. That’s a strong indicator that the market is receptive to the company’s products. Otherwise, its revenues would not be on such an exponential growth trajectory. In fact, the company admits that it has been experiencing challenges meeting demand countywide on major fast-food chains and retailers. The company’s products are also available at major retailers, which means it has already got it right on the distribution networks.
According to the CEO Ethan Brown, the company pretty much has no competition. It has invested so much in research that at this point, it appears to be competing against itself. He states that, this is because, the company has invested significantly in research and development to come up with a product that is unrivalled in the market. This head start that the company has in the market could be driving up investor appetite for its stock, hence its meteoric rise in price upon listing.
However, the biggest driver for Beyond Meat is the increased awareness about environmental issues across the world. More people now understand that climate change is a reality and that it is affecting not just our present, but our future as well. Since animal production is part of what causes global warming, more people are turning to veganism, which explains the increased the uptake of vegan products. That’s why a company like Beyond Meat that has entered the burger market with vegan products is gaining such a huge uptake. This is the one the factors that could play a role in the long-term growth of this stock. Backed by the fact that the company is committed to continue investing in research, and the head start that it has in the market, Beyond Meat could end up becoming a dominant player in the vegan food market.
In spite of its huge potential, Beyond Meat does have some potential risks, the biggest one being competition from deep-pocketed players. One such player is Tyson Foods. Tyson Foods, which was an early investor in Beyond Meat, sold to start its own products. This is one of the largest companies in the world, and if it makes forays into this market, it could be a formidable competitor to Beyond Food.
Nonetheless, the company has a head start, which means by the time the others launch their products, it will have cemented its position in the market. Besides, with such a successful IPO, the company has the financial muscle to invest even more aggressively in product development and marketing. This could see it maintain its current lead irrespective of the power that new entrants have in the market.
It will be interesting to see how this stock performs in the next few months, as the IPO hype around it dies down.