Beyond Meat, a US company specializing in the development of artificial meat, saw its stock price soar by nearly 75% in after hours trading on Tuesday (February 27), with its highest price doubling. On that day, the company announced its latest quarterly performance, with net revenue exceeding expectations, and provided guidance for this fiscal year, with an expected gross profit margin of 15% to 19% in 2024.
Due to the fact that artificial meat is more expensive than traditional meat, this has become the main reason why budget conscious American consumers have been reluctant to choose artificial meat in the past. Over the past year, the stock has fallen by 58%, while the S&P 500 index has risen by 28% during the same period.
However, after several difficult quarters, the financial report submitted by Beyond Meat clearly satisfies investors.
The net revenue for the fourth quarter decreased from $79.9 million in the same period last year to $73.7 million, exceeding analyst forecasts of $66.7 million;
Net loss of 155.1 million US dollars, equivalent to 2.40 US dollars per share, analysts expect a net loss of 0.89 US dollars per share; The net loss for the same period last year was 66.9 million US dollars, equivalent to 1.05 US dollars per share;
The sales guidance for the fiscal year 2024 is between 315 million and 345 million US dollars, and the analyst's forecast is 344.4 million US dollars.
The company pointed out in its financial report that in a global operational review conducted in November last year, it made provisions for excess inventory and accelerated depreciation of certain fixed assets, resulting in a one-time cost increase of $67.5 million in the fourth quarter and a significant expansion of losses in the fourth quarter.
After the US stock market closed on Tuesday, this small cap company with a market value of only $480.8 million rose more than 100% at one point, and the post market increase fell back to 73.5%.
Adjusting strategy to restore growth
During the company's earnings conference call, CEO Ethan Brown outlined a strategy to reposition Beyond Meat's development trajectory and restore growth in the next 12 to 18 months.
He pointed out that while continuing to implement lean management principles, significantly reducing operating costs and cash usage, shrinking production networks to achieve quality and profit growth, and implementing price adjustments to support profit expansion.
Third Bridge analyst John Oh stated that the fourth quarter results indicate that Beyond Meat is taking an encouraging step of "adjusting its business scale to better adapt to the current plant-based meat category.".
Oh added, "This company 'needs to enter a survival mode', considering the current situation of the entire industry, cost saving measures and manufacturing optimization efforts are crucial for Beyond Meat."
In response to the weak demand in the US market, Beyond Meat has lowered prices and adopted higher discounts in its cooperation with McDonald's and Yum! Brands, striving to increase the market share of plant-based meat patties. In addition, the company has successfully maintained people's demand for plant-based meat in the international market, especially in the European market.
Last year, the company implemented cost reduction measures, including layoffs, which helped alleviate the pressure on profit margins caused by sluggish US demand.