Plant-based meat maker Beyond Meat's (NASDAQ: BYND) second-quarter numbers were anything but good. One of them was better than expected, however, and that was good enough for investors today. Data from S&P Global Market Intelligence indicates that as of 3:30 p.m. ET Thursday Beyond Meat shares are up 24.6%.
The question is, does this move mark the beginning of a prolonged recovery?
Probably not.
Beyond Meat serves up a (relatively) pleasant surprise
For the three-month stretch ending in June Beyond Meat turned $93.2 million in revenue into a loss of $34.5 million, or $0.53 per share. The loss was more or less in line with most analysts' estimates, and modestly better than the year-ago comparison. Despite the 8.8% year-over-year decline in sales, however, last quarter's top line was better than expectations of around $88 million. That figure coupled with a wider gross margin -- which reached a company record of 14.7% -- snapped the stock out of a long-standing and erratic downtrend.
Comments from the company's management team helped, of course. As chief executive Ethan Brown reminded investors of Beyond Meat's foreseeable future, "we firmly reiterated our center-of-the-plate position in the global health and wellness trend with the launch of our Beyond IV platform." Beyond IV is the latest evolution of the company's products. They're even lower in saturated fats than its previous generations of products were.
Even so, interest in any of its newest options of late hasn't been keeping up with waning demand for its overall product lineup. This quarter marks the ninth consecutive quarter Beyond Meat has reported lower year-over-year sales. Even if (in Brown's own words) the company is effectively "hammering away at the single most important issue" of educating consumers on the merits of plant-based meat, overall marketability is still in question.
A one-hit wonder
Brown's basically right regarding how much traction is needed here. As he explained during the Q2 earnings conference call: "We don't need everybody to like the product. We [just] need enough people to like it."
It remains to be seen, though, if Beyond Meat can convince enough people to try and then continue buying its particular entry into the vegan meat race. If it was going to be able to, it likely would have proven it can do so by now.
So, investors may want to view Thursday's bullish action for what it is, and nothing more. That's a bounce rooted in a pleasant surprise that doesn't actually solve any of this company's biggest problems. Don't look for this move to snap Beyond Meat stock out of its bearish rut and jump-start a prolonged advance.
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James Brumley 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.
