Should I sell Beyond Meat shares after Q3 results?

Beyond Meat, Inc (NASDAQ: BYND) shares have weakened more than 14% last trading week after the company reported weak third-quarter results. Total revenue has increased above the expectations, but the net loss in the third quarter was $54.8 million or -$0.87 per share.

Net loss in Q3 was $54.8 million

Beyond Meat is a Los Angeles-based producer of plant-based meat substitutes with products designed to emulate chicken, beef, and pork sausage. Beyond Meat reported its third-quarter results on Wednesday; total revenue has increased by 12.7% Y/Y to $106.43 million, while the GAAP EPS was -$0.87 (misses by $0.54).

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Growth in net revenues was primarily driven by a 143% year-over-year increase in sales to international customers, while the net revenues in the U.S declined 14% in the third quarter of 2021.

Adjusted EBITDA was a loss of $36.8 million or negative 34.5% of net revenues compared with a loss of $2.2 million or negative 1.5% of net revenues in the second quarter.

The decrease in adjusted gross margin was primarily driven by increased transportation costs, amortization, and inventory write-offs, but the company will continue to have these issues in the upcoming months. Phil Hardin, CFO of Beyond Meat, added:

We continue to operate in a challenging and variable macro-environment, affected in part by ongoing uncertainty related to COVID-19, labor issues at both retail and foodservice customers, significantly increased transportation costs, raw ingredients and packaging inflation, and global supply chain challenges, which have had a minimal impact on our business thus far, but could represent potential headwinds nonetheless.

Beyond Meat issued weak guidance for the next fiscal quarter and reported that it expects revenue to be just $85 million to $110 million.

This is well below analysts’ estimates, and Bank of America expressed concern that U.S. demand for plant-based protein products appears to be slowing.

Beyond Meat shares remain under pressure, the company’s EBITDA is negative, the book value per share is less than $4, while J.P.Morgan expects that investors will stay away from food companies during the next several months.

Bears control the price

Beyond Meat stock price has fallen more than 60% after reaching the highest level in 2021 of $221 on January 26, and for now, bears remain in control of the price action.

Beyond Meat shares continue to trade near a 20-month low, and if the price falls again below $80 support, the next target could be $70.

On the other side, if the price jumps above $120 resistance in the upcoming weeks, it would signal trading shares, and the next target could be at $130 or even above.

Summary

Beyond Meat shares have weakened more than 14% last trading week after the company reported weak third-quarter results. Bank of America expressed concern that U.S. demand for plant-based protein products appears to be slowing, and probably it is not the best moment to have Beyond Meat shares in your portfolio.

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