Beyond Meat is on a wild ride.
The stock, which has been publicly traded since May, shot as high as $239 more than five months ago, then retreated 66% to $82 from that peak as of Wednesday. In the past week, it has surged 8% on hopes it might secure a supply deal with McDonald's after the burger chain's talks with rival Impossible Foods broke down.
Shares have remained relatively calm since early November, though. Beyond Meat has not broken out of a range of $71 to $86.
JC O'Hara, chief market technician at MKM Partners, says the surprisingly subdued recent stretch might be coming to a close.
"The stock has been pretty much sideways over the last few months. It's trading in a relatively narrow range, but let's remember, this is still a relatively new issue, and anytime we start to see new news come into play, we typically see a pretty volatile reaction," O'Hara said Wednesday on CNBC's "Trading Nation."
O'Hara sees one such stock-triggering event on the horizon.
"Earnings have been a pretty strong catalyst. If we look back at the stock over the last three times they released earnings, we've seen absolute moves of 40%, 12% and 22%. We have the next earnings date set for [Feb. 5], so I don't expect this tranquil sideways price action to last too much longer," he said.
Danielle Shay, director of options at Simpler Trading, says this is a stock for the long haul rather than a short-term trade.
"It's incredibly volatile especially in the short term. However in the long term, I think that they have huge potential. When you look at the niche market that they've created, no one has been able to create a burger like this that's good and that appeals to meat eaters. Meat eaters like it because it tastes good, it's healthier, you can have a smaller ecological footprint, and for those reasons in the long term, I'm bullish the stock," Shay said during the same segment.
Beyond Meat is expected to post a 150% increase in fourth-quarter revenue when it reports earnings, according to FactSet. Full-year sales are estimated to have grown 216% in 2019.
"Short term, definitely a volatile situation, but I love to trade it in the options market when there's a potential short squeeze," Shay added.
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January 09, 2020 at 07:24PM
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Beyond Meat could be barreling toward a major surprise, the charts suggest - CNBC
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