Beyond Meat's 1,600% 4-Day Rally Wasn't a Short Squeeze -- It Was Something Far More Dangerous

If you invest long enough in the stock market, you're bound to witness moves that'll leave you bewildered and speechless. For instance, clinical-stage traditional Chinese medicine company Regencell Bioscience rallied as much as 60,000% on a year-to-date basis despite having around a dozen employees, no prospects of any near-term revenue, and having never undertaken a large-scale clinical trial.

The latest of these eye-popping moves comes courtesy of plant-based meat company Beyond Meat (NASDAQ: BYND), whose shares surged from a closing value of $0.52 on Oct. 16 to as high as $8.85 in pre-market trading on Oct. 22. In a four-day stretch, Beyond Meat's stock jumped by 1,600%, with daily volume surpassing 2 billion shares in consecutive sessions on Oct. 21 and Oct. 22!

Moves of this magnitude, which are spurred by social media interest, harken to the days of the meme stock frenzy during the COVID-19 pandemic. With stimulus checks in hands, investors piled into popular, often heavily short-sold stocks, regardless of business fundamentals, and hoped for a short squeeze that would make them quick profits.

Image source: Getty Images.

While it might appear that Beyond Meat's four-day rally was fueled by a short squeeze, digging beneath the surface reveals a far more dangerous and sinister catalyst.

Understanding the mechanics of a short squeeze

In simple terms, a short squeeze is an event that pummels pessimists. Even though short-sellers (those wagering on a lower share price) play absolutely no role in the success or failure of a publicly traded company -- they have no influence over corporate strategy, governance, innovation, marketing, and so on -- it's widely viewed as "un-American" to short-sell, which effectively bets against the success of a business.

One of the common themes of meme stock investing is to hurt short-sellers or make them pay for wagering against public companies.

While there's no perfect blueprint for a short squeeze, they tend to have many of the following characteristics in common:

• A high level of short interest, relative to the number of tradable shares (known as the "float").
• A relatively high days-to-cover (DTC) ratio. This ratio represents the total number of shares held by short-sellers divided by a company's average daily trading volume. In theory, the higher the DTC, the tougher it will be for short-sellers to exit their position during a rapid rise in the share price of a stock.
• A rising borrow rate. If shares available to sell short become scarce, or the volatility of an individual security picks up, brokers may increase the margin borrowing rate for short-sellers, thereby making it costlier for them to hang onto their position.
• A mad dash to the exit by short-sellers. This is the one telltale theme of short squeezes. As short-sellers buy to cover their position, it can briefly send a rising stock into a short-term parabolic climb.

Though it's easy to apply some of these characteristics to Beyond Meat's stratospheric four-day rally, they don't fit the mold for what we, as investors, just witnessed. Rather, Beyond Meat's historic run up has everything to do with social media misinformation.

Misinformation was the key driver of Beyond Meat's parabolic climb

Peruse social media platforms like X (formerly Twitter) and you'll find countless examples of social media financial influencers, as well as select online publications/services, claiming Beyond Meat's short interest relative to its float is anywhere from 80% to north of 100%!

$BYND-SHORT INTEREST ON BEYOND MEAT STOCK AT NEARLY 109% OF FREE FLOAT VS ABOUT 82% ON WEDNESDAY-ORTEX DATA

-- *Walter Bloomberg (@DeItaone) October 23, 2025

If these figures were accurate, it would certainly explain the dynamics of Beyond Meat's run up. But these figures aren't accurate, and they expose the dangers of relying on third-party sites and self-proclaimed social media financial gurus instead of getting pertinent data directly from the financial filings of public companies.

On Oct. 13, Beyond Meat issued a press release noting that approximately $1.115 billion of its existing convertible notes due in 2027 had been tendered (96.92% of outstanding). These debtholders were to receive 316,150,176 new shares on Oct. 15. Based on the latest share count from Beyond Meat, which is listed in its Schedule 14A annual shareholder meeting and shareholder vote notice, it had 397,607,401 outstanding shares, as of Oct. 15. This is up from roughly 76 million shares prior to the debt-for-equity conversion.

It can take days, a week, or even longer for some financial sites to update their data, including shares outstanding and float, the latter of which impacts short interest. Based on newly updated short interest data, 51,834,529 shares are held short. With these figures, Beyond Meat's short interest is less than 14%, which is a far cry from the social media folks crowing about an 80% to 100%-plus short interest in Beyond Meat.

Furthermore, much of the short interest leading up to the debt-to-equity conversion was likely bondholders hedging their position. When bondholders lend to a struggling company, taking a short position can hedge potential losses if said public company isn't able to repay some or all of its loan obligations.

When bondholders received their debt-for-equity allotment, they would have had no trouble covering their shares held short considering the outstanding share count had more than quintupled from 76 million to north of 397 million shares.

Image source: Getty Images.

To drive the proverbial nail in the coffin for the short squeeze thesis, the lockup period to sell shares ended on Oct. 16 for bondholders, which means they've been free to sell shares at will as Beyond Meat's stock has gone parabolic. Out of the four listed beneficial owners in Beyond Meat's Schedule 14A with at least a 5% ownership of outstanding shares following the debt-for-equity swap, three have already reduced their stakes from 5.2% to 0% (Context Funds), 8% to 2.3% (D.E. Shaw), and 8.4% to 4.82% (Wolverine), respectively, based on required Schedule 13D and 13G/A filings.

These former bondholders are decisively selling as meme stock investors pile into Beyond Meat stock using stale data from some financial sites and incorrect assessments pushed by financial influencers on social media.

If there's ever been a textbook case highlighting the importance of primary data sources (i.e., company filings with the Securities and Exchange Commission), Beyond Meat might be it. Though the fear of missing out (FOMO) may lead to some near-term volatility in Beyond Meat stock, misinformation and the expectation of ongoing share dilution will likely cost momentum-chasing investors a lot of money.

Sean Williams 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.