27 Apr Updated: Beyond Meat Expects to Raise $210 Million from its IPO; Here’s Everything You Need to Know
Here are some facts
- According to the revised prospectus released on April 30, Beyond Meat plans to offer 9.625 million shares of common stock, which it expects to price between $23 and $25 per share (price is subject to change).
- Beyond Meat’s current enterprise value (EV), based on information included in the revised prospectus, is $1.4 billion; a ~16x EV/revenue multiple.
- It’s estimated that Beyond Meat will receive $210 million from the issuance after deducting estimated underwriting discounts and commissions and estimated offering expenses.
- Beyond Meat will be listed on the Nasdaq exchange using the ticker symbol BYND.
- According to the Nasdaq website, the IPO is expected to be released May 2, 2019 (date is subject to change).
Beyond Meat is one of the fastest-growing food companies in the U.S., offering a portfolio of revolutionary plant-based meats. The company’s meat alternatives tap into consumer demands for food products that address concerns related to “health, climate change, resource conservation, and animal welfare.”
Beyond Meat has a strong presence at leading food retailers, including Albertsons, Kroger, Wegmans and Whole Foods Market and recently announced that they will be in more than 3,000 Canadian grocery stores nationwide by end of May 2019, including Sobeys, IGA, Loblaws, Longos, Metro and more.
Beyond Meat products are currently being served in approximately 12,000 restaurant and foodservice outlets in the U.S. and Canada, including BurgerFi, Bareburger, Carl’s Jr., Del Taco, TGI Fridays and A&W Canada.
Their products are also available in prominent entertainment and hospitality vendors, such as Cinemark Theatres, Disney World, Hilton, Hyatt, LEGOLAND and Marriott.
In 2018, restaurant and foodservice channel accounted for approximately 42% of Beyond Meat’s net revenues and has grown approximately 868% since 2016.
The demand was so high that Beyond Meat struggled to keep up in 2017 and 2018 which, according to Beyond Meat, significantly constrained their net revenue growth in those years.
Even still, the firm’s revenue doubled from $16.2 million in 2016 to $32.6 million in 2017 then grew 170% year over year to $87.9 million – representing a compound annual growth rate (CAGR) of 76%!
That said, Beyond Meat continues to lose money as it ramps up production, with net losses of $25.1 million, $30.4 million, and $29.9 million for 2016, 2017, and 2018, respectively.
In fact, the company has experienced net losses in each year since inception in 2009 and, operating expenses and capital expenditures are expected to “increase substantially” in the foreseeable future as Beyond Meat continues to invest in their business to drive continued and sustainable growth.
Here is what you need to know about Beyond Meat’s recent announcement regarding their upcoming IPO:
According to the revised prospectus released on April 30, Beyond Meat plans to offer 9.625 million shares of common stock, which it expects to price between $23and $25 per share for an overall enterprise valuation of $1.4 billion.
After issuance, Beyond Meat is expected to receive $210 million, after deducting estimated underwriting discounts and commissions and estimated offering expenses. The company’s plan is to invest a majority of the proceeds into R&D, sales and marketing capabilities and current and additional manufacturing facilities.
Beyond Meat has an enormous opportunity, but the $1.4 billion valuation today might be a stretch
In my previous article, I provided a rationale for why I believe the plant-based market could be worth up to $35 billion in the US alone.
If Beyond Meat maintains its current market share in the US plant-based meat market (~13%), then that would mean the firm’s estimated long-term value could approach $4.5 billion.
Today, however, Beyond Meat is not profitable which seriously calls into question the validity of the $1.4 billion enterprise valuation (a ~16x EV/revenue multiple).
Risks associated with investing in Beyond Meat’s IPO
In the prospectus, Beyond Meat covers ~60 risks associated with the purchase of their shares; I’ve highlighted a few below:
- They have a history of losses, and they may be unable to achieve or sustain profitability as it looks to invest heavily in the near term to meet increased demand; which brings forth a related risk of whether they are able to scale up effectively.
- They rely on a limited number of suppliers and, without adequate contingencies, a slight interruption in supply from even one supplier could have material adverse effects on their business and impede growth.
- They face intense competition from both plant-based and animal-based meat products. In fact, Tyson Foods Inc. said on Wednesday that it has sold its 6.5 per cent stake in Beyond Meat, as the no. 1 U.S. meat processor looks to develop its own line of alternative meat products. This is definitely a concern for Beyond Meat, given that 93% of customers purchasing The Beyond Burger also purchase animal-based products.
- Newly minted public companies tend to be extremely volatile in the weeks and months after their debut. Take Lyft for example, even though the stock price ended its first day up nearly 9%, it has since fallen nearly 27% roughly one month later.
It is important to note that the recent prospectus is still not final which means a lot of things can change in the document between now and when the shares go on sale.
Expected launch date and how you can buy
Beyond Meat will be listed on the Nasdaq exchange using the ticker symbol BYND and according to the Nasdaq website, the IPO is expected to be released May 2, 2019.
To buy shares you can visit your local bank branch and chat with a qualified Investment Advisor or complete the investment on your own using one of several self-directed online platforms.
If you have any questions about the information included in this article please feel free to reach out to me directly at email@example.com.
You can also follow me on Twitter to get digestible daily insights into the plant-based industry.
Forward-Looking Statements: This article includes certain disclosures which contain “forward-looking statements.” READ MORE