Beyond Meat Inc (NASDAQ: BYND) could eventually go “bankrupt” as it lacks a plausible strategy to turn free cash flow positive, says New Constructs’ CEO David Trainer.
Competition is hitting Beyond Meat shares
Trainer dubs “competition” a major headwind for the plant-based meat substitutes company that’s already down more than 50% from its year-to-date high. On CNBC’s “Power Lunch”, he said:
Beyond Meat doesn’t have a competitive advantage. Most importantly, their biggest competitors like Kroger or Albertsons control the amount of shelf space that it gets and have an opportunity to get in front of customers.
The Nasdaq-listed firm is scheduled to report its Q2 financial results on Thursday, after the bell. Consensus is for it to lose $1.14 a share this quarter.
Wall Street currently has a consensus “hold” rating on BYND with downside to $21 on average. Beyond Meat shares once traded at a high of $235.
Beyond Meat is unlikely to find a potential buyer
Trainer agrees that Beyond Meat has the option to merge for survival. Unfortunately, though, valuation stands in the way of that as well.
There aren’t many potential buyers considering how expensive the stock is. Around $35, you have to be crazy to want to touch it with a ten-foot pole because it’s priced for so much success that it’ll never achieve.
Many of its larger competitors, like Tyson Foods, already have an alternative meat business that further fades the possibility of a takeover, he added.
The California-based company has tested its products at several notable food outlets like McDonalds, Panda Express, and Yum Brands but none of them have created promising prospects.
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