Beyond Meat Stock Still Has a Very High Level of Short Interest

Short selling data can be a powerful risk management tool. Research shows that short sellers are skilled at processing information. It also shows that heavily-shorted stocks tend to underperform.

In this report, we are going to look at the short interest data on Beyond Meat Inc (BYND:US). Beyond Meat is a food company that specializes in plant-based meats. The company, which was founded in 2009, currently has partnerships with a number of fast-food chains including McDonald’s, TGI Fridays, and Pizza Hut and also sells its products through retail channels. It is listed on the Nasdaq and currently has a market cap of around $855.75 million.

High Short Interest

The short sellers generated substantial profits here last year. At the start of 2022, the stock was trading near $67. It ended the year at $12 – around 80% lower.

It seems the short sellers expect the stock to continue falling though. We say this because, at present, 24.14 million BYND shares are on loan, which represents around 39.86% of the free float. Utilization is 100%, which tells us that short sellers are shorting every share they can get their hands on, while the cost to borrow stock is a high 35.61%.

These figures indicate that, within the hedge fund world, sentiment towards Beyond Meat stock is very bearish.

Lack of Profits

In February this year, Beyond Meat posted better-than-expected Q4 results. Revenue for the quarter came in above the consensus forecast, while guidance for full-year revenue was also above estimates. And thanks to cost cutting measures, the company said that it expects operating expenses to fall more than 20% this year, versus a rise of 9% last year. On the back of these results, a number of brokerages raised their price targets for the stock.

These results do not appear to have deterred the short sellers, however. It seems they are focused on the lack of profitability here. This year, Beyond Meat is expected to post a net loss of around $220 million, and it’s not clear as to when the company will be profitable.

Another issue the short sellers could be focusing on is demand. Recently, demand for plant-based meat products has fallen quite significantly. According to Bloomberg, supermarket sales of plant-based meat fell around 14% last year while restaurant sales also fell by double-digits. It seems that inflation has had a substantial impact on demand, as it has forced consumers to tighten their belts and purchase lower-priced goods.

Given the high level of short interest here, we think caution is warranted towards the stock. In our view, the attention from short sellers is a red flag.