Beyond Meat Is Trading Near Its Lows. Is It Finally Time to Buy?

Beyond Meat (NASDAQ: BYND) is a stock that has seen much better days. It's now firmly in penny-stock territory, trading below $1 per share. That isn't all that shocking a development, given the stiff competition it faces, and the many bottom-line losses it's posted over the years.

Yet, the company is pivoting its business, leading some to hope it might be heading toward the light soon. Here's my take on whether that makes its stock a deep-bargain buy at the moment.

Image source: Beyond Meat.

Hot, then not

Beyond Meat rose to fame, prominence, and popularity (well, once upon a time, anyway) as one of the first makers of plant-based food products that approximate animal protein. With consumers worldwide increasingly conscious of their health, such innovation seemed well timed.

But rivals, notably The Impossible Company, entered the same space, and competition quickly intensified. It remains so to this day, as reflected in Beyond Meat's recent fundamentals. In its first quarter, the results of which were published last week, net revenue saw a steep 15% year-over-year decline to slightly over $58 million.

In a slightly more positive development, the company managed to narrow its net loss. This was still deep in the red, however -- it came in at $46.8 million not under generally accepted accounting principles (GAAP), against the year-ago shortfall of $59 million. And not for the first time, Beyond Meat missed analyst estimates on both the top and bottom lines in the period.

The main problem, as I see it, is that the company's offerings -- plant-based approximations of carnivorous staples such as meatballs and chicken nuggets -- are not as novel as they were several years ago. A key reason for this is the entry into the market of both clever upstarts (Impossible Foods, for example) and experienced food industry competitors such as Tyson Foods.

It isn't easy to succeed in such a heavily contested environment, especially when a well-capitalized Tyson or Hormel Foods is determined to do so.

Minus the Meat

So, like many sensible companies that find themselves in a crowded field, Beyond Meat is going the broaden-the-business route. In February, it launched its Beyond Immerse line of plant-based, sparkling drinks. Lately, it's also started dropping the "Meat" from some of its branding (or shifting it to Beyond the Plant Protein), in a clear attempt to be less readily identified with alt-animal protein.

In doing this, however, Beyond Meat is wading into another crowded consumer segment. The drinks industry has grown to a massive size these days, with all sorts of liquids competing for the consumer dollar. Potions purporting to be healthy -- or at least not overloaded with sugar -- have been on the market for years. The Immerse products are colorful and attractive, but it's hard to imagine what's effectively a Johnny-come-lately business carving out a meaningful niche in the segment at this point.

Even if Immerse scores some wins and becomes an underdog sensation, I doubt that the product line alone will reverse its maker's habitual revenue declines and steep net losses. Yes, Beyond Meat stock is very cheap, but it's that cheap for a reason. I think it's best not to buy it now.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Beyond Meat. The Motley Fool has a disclosure policy.