Is Beyond Meat's stock price beyond reason? - CBS News

Beyond Meat's share price continues to sizzle since its IPO, soaring another 21% to $168 per share in Monday trading.
That means the stock has jumped more than 600% in just over a month since the company went public.
Short sellers betting on a share price crash have already lost nearly $600 million.
Analysts at J.P Morgan Chase downgraded the stock to "neutral" on Tuesday, news that sent Beyond Meat shares tumbling 19% to $134.

Investors and analysts are scratching their heads as shares in alternative meat company Beyond Meat continue to cook up a storm. Its stock price jumped another 21% to $168 per share in Monday trading.

That means the El Segundo, California-based company's stock has soared more than 600% in just over one month since its public debut, giving it a nearly $10 billion valuation and leading critics to liken the stock rally to a bubble. Short sellers betting on a share price crash have already lost nearly $600 million betting against the company, making Beyond Meat the least profitable short in the packaged food and meat sector this year, according to research firm S3 Partners.

"If shorts don't begin covering their positions soon, we can assume that BYND is becoming Tesla-esque where being a long shareholder is more than an investing decision but also a lifestyle decision, while being a short seller is a more of a test of conviction and principle," Ihor Dusaniwsky said in a Monday research note referring to Beyond Meat by its Nasdaq ticker symbol of BYND.

Small float, early shorts, no public competitors, buoyant market, great story, millennial sex appeal, large total addressable market.
This is the recipe for a bubble. All the ingredients are there.
— Downtown Josh Brown (@ReformedBroker) June 7, 2019

J.P. Morgan industry analysts on Tuesday downgraded Beyond Meat's stock to "neutral," saying the company's revenue and profit potentials are fully priced into shares. Beyond Meat stock tumbled nearly 19% to about $134 per share on the news.

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Critics say the company's stock market market value, which is larger than Shake Shack's and Wendy's combined, is hardly justified given that the money-losing company generated just $40 million in revenue in its first quarter. However, the high trading volume suggests that investors are treating the stock rally as a short-term opportunity to turn a quick profit: Beyond Meat trading volume reached 24.7 million shares Monday and 23.9 million Friday, the highest numbers since the company's May 2 public debut.

"They're looking at the spreads," said Howard Silverblatt, senior industry analyst at S&P Dow Jones. "They go in, they make money and they walk out."

Beyond Meat isn't the first to offer a vegetarian patty, nor is it the only company addressing the huge growth potential in the alternative meat market. California rival Impossible Foods also offers a soy-based burger and is rolling out in Burger King locations nationwide. However, Beyond Meat is the first one to go public, generating more than its fair share of investor excitement. "There's competition, yes, but this is the one around right now," Silverblatt said.

Investor excitement can be short-lived, of course. Another stock that recently captured public attention was that of cannabis company Tilray. It climbed to over $200 per share in September but now trades around $43. "It's a good example of how hype can carry a stock to such great heights, ultimately to be disappointed," said Douglas Boneparth, president of Bone Fide Wealth.

However, stock performance varies widely from case to case, and it's unclear when or if the Beyond Meat rally will ever reverse: "If there's anything I've learned," said Boneparth, "it's that nobody can really predict what's going to happen."

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