This week, the stock of Beyond Meat experienced a notable decline.
Another tough week for Beyond Meat (BYND, down 11.83%), as the plant-based meat company delivered disappointing earnings. Revenue grew by 4% to $76.7 million, edging out estimates, but the company missed bottom-line expectations, announced layoffs, and revised its 2025 guidance lower than expectations.
As of Thursday at 1:00 p.m. ET, the stock had dropped 20.1% for the week, according to data from S&P Global Market Intelligence.
Struggling Beyond Meat
While revenue growth was an improvement from earlier in the year, other numbers indicated that Beyond Meat is still battling. Gross profit was only $10 million, or 13.1% of revenue, a significant jump from a year ago but still showing the company is unable to charge enough to cover costs. Operating loss for the quarter was $37.8 million, and per-share loss was $0.65, worse than estimates.
The company announced layoffs, cutting 9% of the workforce, and said it would temporarily pause operations in China.
Looking ahead, Beyond Meat projects revenue of $320 million to $335 million for 2025, showing flat growth compared to 2024's $326.5 million. At the midpoint, that was also below the consensus of $331.8 million.
Beyond Meat's Struggle
Improvements in profitability are on the horizon with a goal of achieving 20% gross margins in 2025, but the company still seems a distance away from bottom-line profitability. The lack of top-line growth is concerning, as Beyond Meat was expected to steadily take market share from traditional meat processors.
At this point, the Beyond Meat investment argument appears to be faltering. The company may eventually rebound, but management needs better ideas than just cutting costs to regain profitability.
Enrichment Insights
Beyond Meat is facing several financial hurdles that affect its profitability and future prospects:
- Profitability Concerns: Despite achieving a positive gross margin of 13.1% in Q4 2024, Beyond Meat reported a substantial net loss of $160.3 million for the quarter and $156.1 million for the year. The company's EBITDA loss was $101.7 million, reflecting ongoing profitability issues.
- Debt Burden: Beyond Meat has a considerable debt load of approximately $1.1 billion, which presents challenges for interest payments and maintaining liquidity.
- Cost Management: While the company reduced operating expenses by more than $50 million in 2024, maintaining cost reductions remains a challenge.
- Market Saturation and Competition: The plant-based meat category is experiencing a reset, with consumer confusion and intense competition impacting growth.
Looking forward, Beyond Meat expects revenues between $320 million and $335 million for 2025, with a target gross margin of around 20%. The company plans layoffs and operation suspension in China to reduce expenses further. Beyond Meat aims to achieve EBITDA-positive operations by the end of 2026 through margin improvement and cost reduction. The company is focused on sustainable operations, improving gross margins, and strengthening its balance sheet to ensure long-term profitability and leadership in the plant-based meat industry.
- Investors might want to reconsider their strategy for Beyond Meat (BYND) as the company's investment argument seems to be faltering due to its financial hurdles and lack of top-line growth.
- In an effort to improve profitability, Beyond Meat has announced layoffs and will temporarily suspend operations in China, reducing its workforce by 9% and cutting costs further.
- While the company aims to achieve 20% gross margins by 2025, financial analysts are concerned about its debt burden of $1.1 billion and the ongoing profitability issues, as indicated by its substantial net loss of $160.3 million for the quarter.
- Despite the disappointing earnings report and financial challenges, some investors are still confident in the future of plant-based meat companies, as the market continues to grow and greater awareness of sustainability and animal welfare increases demand for meat alternatives.
