Meme Stock Beyond Meat Sees Sudden Decline in Value, Raising Doubts Among Investors
Beyond Meat, which gained over 1,000% in a matter of days, has seen its price plummet from a high of $7.69 to $2.91, marking a drastic decline of nearly 19% on the day. This recent drop raises questions about the momentum behind this so-called "meme stock."
The plant-based food company saw an incredible surge in value following its listing on various social media platforms by investors attempting to turn it into a popular trend akin to GameStop's meteoric rise in 2021. However, as trading came to a close, BYND stocks continued their downward slide.
The decline is not unlike what happened with GameStop's own stumbles amidst an otherwise explosive gain of over 737% from $4.75 to $39.80 within two weeks in January 2021. GME fell by 50% on January 12th before another surge of nearly 529%, according to TradingView.
"We have now witnessed what seemed like a mass hysteria," said Beyond Meat influencer Dimitri Semenikhin, also known as Capybara Stocks, speaking exclusively to Decrypt. "I truly believe the recent drop was nothing more than an anomaly. Its stabilization is a promising sign for BYND investors."
"I still believe in its potential despite this slight downturn. One critical factor will be the guidance provided by their financial reports," added Semenikhin, hinting at insights expected from the upcoming earnings report on November 5.
Beyond Meat's struggles are deeply rooted in its poor performance, with Lebowitz highlighting issues such as heavy debt and diluted equity following a crucial swap, which made it reach a low price point of $0.50 back then.
"Meme stock traders have found themselves fascinated by short selling," said Semenikhin, attributing this to their aversion towards short sellers who aim to suppress the price of assets for profit. The recent activity of buying up stocks and forcing those with short positions to react was reminiscent of GameStop's phenomenal gains in early 2021.
Beyond Meat Faces Challenges Ahead: Short Sellers and a Rebound
It remains to be seen how this story unfolds as investors await further updates from Beyond Meat, including its earnings report. While some like Semenikhin remain optimistic about the stock’s potential short-term recovery, others such as Lebowitz fear the inevitable decline of BYND back down to $0.50 or even lower.
"The fact is," Semenikhin said, "for every investor who has invested in Beyond Meat at a high price, not many can claim they 'owned' it when it dropped from $7.69 to $2.91."
For Lebowitz, this market movement seems too ephemeral: "I think this whole thing is just a fad and that BYND's true value lies much lower. Meme stock fans may enjoy chasing recent history but the fundamentals tell a very different story.