Beyond Meat Earnings Miss: Declining Demand Impacts Results

The collaboration between Beyond Meat and McDonald’s for the McPlant burger proved insufficient to prevent a significant decline in the company’s stock value following the release of its third-quarter financial results, which were considerably lower than anticipated by analysts.

This substantial shortfall caused shares to decrease by almost 29% during after-hours trading on Monday, after the company reported revenues of $94.4 million and a loss of 28 cents per share, compared to analysts’ expectations of $132.8 million in revenue and a 5-cent per share loss.

According to Beyond Meat’s president and chief executive, Ethan Brown, “Our financial performance reflects a quarter in which, for the first time since the pandemic’s onset, we fully experienced the unpredictable impact of COVID-19 on our net revenues and, consequently, throughout our profit and loss statement.” He further explained that, unlike the second quarter where increased retail purchases and consumer stockpiling compensated for the decline in foodservice sales due to COVID-19 restrictions, the lingering effects of retail stockpiling combined with ongoing difficulties for many foodservice clients resulted in third-quarter results that were below projections.

The company’s statement indicated a loss of $19.3 million in the third quarter of 2020, in contrast to a net income of $4.1 million during the same period in the previous year. The net loss per common share amounted to 31 cents, compared to 6 cents per share in the prior-year quarter.

Despite this unfavorable performance, Beyond Meat is continuing to pursue its expansion strategy by acquiring a new manufacturing facility in Pennsylvania and broadening its presence in China and Europe. Brown also highlighted other data suggesting the company is experiencing growth.

“Despite the considerable disruption caused by the pandemic, we continue to observe robust growth in key metrics such as household penetration, consumer purchase rates, frequency of purchases, and repeat customer rates; our brand’s sales growth continues to exceed that of the overall category; and we saw an increase in year-over-year sales velocity even as we expanded distribution,” he stated.

Beyond Meat’s third-quarter earnings report concluded a day of market volatility for the company, with its share price fluctuating as details about the McDonald’s plant-based burger became known. Initially, shares declined after McDonald’s announced that its new plant-based patty and chicken substitute were formulated internally. However, McDonald’s misrepresented its involvement in the creation of the McPlant, which was actually developed in collaboration with Beyond Meat, as clarified in a statement to CNBC. Beyond Meat shares recovered briefly but then fell again after the market closed due to the release of its third-quarter earnings.

Brown reaffirmed his positive view of the relationship with McDonald’s, despite the restaurant chain’s initial decision not to acknowledge Beyond Meat’s contribution.

“Our partnership with McDonald’s is very positive and remains strong,” Brown said during an investor conference call. “I understand their choice to describe the McPlant platform in general terms. We are currently collaborating with them on several initiatives.”