Is There a Future for Beyond Meat?

Beyond Meat (NASDAQ: BYND) sizzled last week, with shares surging 238% on two pieces of positive news. First, Roundhill Investments added the plant-based meat maker to its new Roundhill Meme Stock ETF, triggering a 128% rally. The following day, Beyond Meat announced an expanded distribution deal with Walmart, which fueled a 146% pop.

While Beyond Meat's big week seemed to renew investor interest in the beleaguered burger maker, there were no changes to its fundamentals -- which are just awful.

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Meme mania goes meatless

Last week's hysteria had all the ingredients of a retail-driven short squeeze: a beaten-down meme stock, massive short interest, and some positive catalysts to ignite the flame. At its peak, Beyond Meat shares were up nearly 1,100% for the week until an update on the company's grim financial picture brought the stock back to Earth.

On Friday, Beyond Meat disclosed preliminary third-quarter results, which were in line with its guidance -- and that's the problem. The company expects third-quarter revenue of roughly $70 million, or a 14% year-over-year decline. In Q2, revenue dropped 20% to $75 million, and the company reported a net loss of $29.2 million.

Even with last week's rally, Beyond Meat stock has plummeted 99% from its 2019 all-time high. The company has three major challenges: declining sales, persistent losses, and crushing debt.

Beyond Meat recently converted a big chunk of debt to shares, reducing its debt load dramatically. However, the stock price hit an all-time low on Oct. 16 when the company announced that lock-up restrictions were expiring on 316.2 million newly issued shares.

The company's problems go deeper than its balance sheet. In a time of sticky inflation, shoppers have soured on premium-priced plant-based foods, and there have been questions about the health benefits of meatless alternatives. Then there's this towering obstacle: Many consumers simply don't like the taste of fake meat.

Beyond Meat has hired consulting firm AlixPartners to help turn things around, and announced a 6% trim in headcount. I wouldn't be surprised if Chapter 11 reorganization is one of the options being explored.

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