Beyond Meat set to slip below IPO price as surging costs raise cash doubts

div classBodysc17zpet90 cdBBJodivpReuters – Shares of Beyond Meat slumped 28 and were on track to open below their initial public offering price for the first time on Thursday as investors fretted over the vegan meat makers rising costs to battle increased competition.p

pCash used for operations in the first quarter surged to 165 million from about 31 million a year ago, as the plantbased meat pioneer diversified its product range and offered steeper discounts to protect its market share.pdivdivdiv classBodysc17zpet90 cdBBJodiv

p“Beyond Meat‘s cost structure may be out of whack, and cash may run out by the end of next year,” J.P. Morgan’s Ken Goldman said. p

p“We worry that managements outlook is a bit out of balance with current realities.”p

pOn Wednesday, Chief Executive Officer Ethan Brown sought to address the concerns.p

p“I wouldn‘t take this quarter’s cash consumption and then just kind of play it out and assume that were out of cash based on that,” he said, adding the company was taking “several measures” to reduce expenses.p

pBeyond Meats shares were trading at 18.80 before the bell on Thursday, much lower than its 2019 IPO price of 25. Its market value has plummeted to 1.66 billion from a peak of about 14 billion. p

pAt least five brokerages cut their price targets on the stock on Thursday, with some raising concerns over the companys path to profitability, especially as they anticipate cost pressures to remain due to surging inflation. p

p“Plantbased meat is not a fad, Beyond Meats mission is noble, … however, we remain of the view a profit inflection may be several quarters out, if not years,” Cowen analysts said. p

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pp Reporting by Aishwarya Venugopal in Bengaluru Editing by Sriraj Kalluvilap

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