Beyond Meat (NASDAQ: BYND) has proven to be one of the most successful initial public offerings this year, offering around 48 million shares (80% of its shares outstanding) at a 350% price surge of $120.
"We think larger packaged food companies will end up as the category leaders in the space given their vast global footprint and embedded relationships throughout the supply chain," CFRA analyst Arun Sundaram wrote in a note. "Yet we expect Beyond Meat to be the greatest disrupter in this space since no public packaged food peer comes close to Beyond Meat in terms of research and development spend as a percentage of sales."
Beyond Meat's direct competitor is Impossible Foods, and both have been credited with forming successful partnerships with popular restaurant chains such as Burger King and Del Taco Restaurants.
Beyond Meat started out with an IPO of $25 per share, which rose to a whopping $120 and has now settled at around $111. The stock has dropped 35% over the last 3 months mainly because the lockup period expires on October 29, which will involve many cash outs as there will be more shares available for short sellers to borrow, thereby lowering borrowing costs.
"Given the dramatic appreciation since the IPO, we expect many insiders and private equity funds to cash out, putting further downward pressure on the stock," continued Sundaram.
It seems as though Beyond Meat has a lot of scope to grow in terms of partnerships, steamrolling its breakfast sandwiches into 9000 Dunkin Donuts stores starting November 6. This is the company's first nationwide fast food rollout, and guarantees the future of the stock in the long term.
"It will take a few days to a week, after the initial wave of long sales settle for shares to start hitting the stock lending market and we should expect rates to dip below 100% fee rather quickly, and depending on how many shares get into lending programs, fall into the 10%-40% fee range in the very near term," said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.