Beyond Meat Inc. shares stepped back from a meme-style surge that drove the price up more than 1,300% over four days as day traders piled into the beaten down stock.
Shares in the struggling maker of plant-based burgers and sausages jumped as much as 112% to $7.69 Wednesday, only to reverse course and give back the all of the gain by early afternoon trading. That snapped what had been an extraordinary jump in the stock since Thursday, when it closed at $0.52.
The rally started Friday and picked up steam Monday, when Business Insider reported that a trader named Demitri Semenikhin has been touting the stock on social media.
The momentum may have been fueled by day traders trying to snap up the shares to squeeze short sellers, who had bet against the company by selling borrowed shares and needed to buy them back to close out positions.
About 64% percent of the shares available for trading had been sold short as of the end of September. Roundhill Investments added Beyond Meat to its Roundhill Meme Stock ETF, the firm said in a post on X late Monday, in another sign of the return of the meme-stock trend first seen during the pandemic.
“It’s definitely a sign that the level of speculation and froth in the market is still extremely high,” said Matt Maley, Chief Market Strategist at Miller Tabak Co. LLC.
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The rally had taken another leg higher on Tuesday when the company announced that Walmart Inc. will expand the availability of its products to more than 2,000 stores, according to a statement.
Wall Street analysts, however, remain skeptical of the company’s prospects. Beyond Meat has six sell-equivalent recommendations, five holds and no buy ratings.
“A deal to increase distribution is great if sales follow, but looking at consumer sentiment over meat replicas it’s clear Beyond Meat has a huge mountain to climb,” Danni Hewson, head of financial analysis at AJ Bell said. “The current flurry of activity seems to have more to do with a short squeeze than any real shift in investor appetite for the stock.”
The once-popular stock received a boost as the pandemic pushed more people to ditch meat in favor of healthier alternatives. The trend, however, has not lasted and the brand has since struggled as consumers were increasingly put off by excessive processing, high costs and taste.
The stock on Wednesday swung between the more than 112% gain and a loss of as much as 28%, with trading halted more than a dozen times due to the volatility. By shortly after 1 p.m. New York time it was unchanged.
Beyond Meat shares still remain above where they were before early last week, when the company said nearly all creditors had accepted a debt swap that will lead to a substantial dilution for shareholders.
“Beyond Meat could still turn things around, but that turnaround must be based on solid products that recapture the interest it initially enjoyed by tapping into current eating trends and delivering the kind of value for money that today’s shopper requires,” said Hewson said.
With assistance from Michael Msika.
This article was generated from an automated news agency feed without modifications to text.
