In Focus: Beyond Meat
It has been a wild year for Beyond Meat. This time last year the company was getting ready to make its public market debut. The mood around the company going public wasn't anything special because it wasn't a tech company. But I was super excited. I knew this was a good company, with real demand for its products, and a real need to gain access to the public markets in order to grow.
Beyond Meat went public on May 2, 2019 at $25 per share. It closed the trading day at $65.75 per share. On June 3, 2019, a month from its IPO, the stock was trading at $96.16, a 280% increase from the stock's IPO price.
The excitement cooled between October 2019 and January 6, 2020. During that time the stock traded between the mid 70's and the mid 80s, but still well above its IPO price. The stock went on another bull run in 2020 hitting $126.10 per share before the coronavirus pandemic hit. On March 18, 2020 the company hit its bottom at $54.02. Now as I write this, Beyond Meat is trading at $108.78. As I wrote earlier, it's been a wild ride for Beyond Meat.
Things may get crazier over the next 12 months for Beyond Meat. Last week Starbucks (SBUX) announced a plant based menu in its China locations, which will feature Beyond Meat lasagna and a Beyond Beef Spicy & Sour Wrap.
Why This is Big
For American brands, China is the like the city of gold. They will never say this publicly or so straight forward, but it is. Savvy investors know it, that is why when a company that sells consumer products mentions that it is entering China the stock price increases. China's population or 1.3 billion as of 2018 is four times more than the United States population. According to this livekindly blog, over 50 million people in China are vegetarians. According to this chart the vegetarian population in the United States is between 5% and 8% of the total population, almost less than half of China.
China has seen unprecedented growth over the last several decades, which has created a large middle class population. According to this China-Briefing article 400 million people or 140 million households make up China's middle class. In comparison, America's total population as of 2019 was 328 million.
It's understandable why China is considered the city of gold, why companies go above and beyond to get their products into the Chinese market, and why Beyond Meat in China could be big for Beyond Meat shareholders. But it's not all roses, getting a foothold in China is one thing, getting a decent market share in China is another thing. China's laws favor the Chinese version of the American company's product, more than it favors intellectual property rights. This will be a major obstacle for Beyond Meat when they have to compete against their own product made by a Chinese company.
I've long been a Beyond Meat fan. I think they have a superior product to what non-meaters had to choose from before Beyond Meat products hit the markets. Sadly though, I've failed to get involved. I missed out on the IPO and I've recently missed out on the coronavirus pullback.
Beyond Meat is a tremendous growth story. China is a big part of their growth story, India is going to be another big piece to the growth story. The current problems with the United States meat supply, which could cause a meat shortage could be a another small part of the Beyond Meat growth story.
Investors have focused on the big tech companies and how they will come out on the other end of the coronavirus crisis, I've been guilty of this too. But Beyond Meat's story warrants a deeper look from investors who prefer to invest and hold over a long-term time frame.