Beyond Meat, the leading U.S. alternative meat company that once rocked Wall Street as the so-called "future food," is on the brink of bankruptcy. Its corporate value, which once topped $10 billion (about 13 trillion won), has shrunk to $79 million (about 100 billion won). Its share price also fell below $1 per share on the New York stock market, leaving it stuck as a "penny stock." Experts said this incident is not merely the failure of a single company but a symbolic event showing that the entire alternative meat industry, which swept across the world, stands at a critical crossroads.
According to Reuters and others on the 14th (local time), Beyond Meat's share price on the Nasdaq on the 13th plunged nearly 50% in a single day to close at $1.04. Compared with July 2019, when its stock topped $239 per share at its peak, it has effectively become worthless.
On the 14th, it fell to 78 cents, devolving into a "penny stock." In the securities industry, shares under $1 are called "penny stocks," which is generally read as a signal that a corporation's management condition is very poor. Under Nasdaq rules, if a stock stays under $1 for 30 consecutive trading days, delisting procedures may begin, raising the possibility of being forced out of the market.
As its liabilities recently topped 1 trillion won, Beyond Meat presented investors with a new self-rescue plan to repay its debts. The core of the new liability resolution plan is a "debt swap (exchange)" that converts existing bonds into new bonds maturing in 2030 and into shares.
The problem is that the number of newly issued shares in this process could reach up to 326 million, more than four times the total number of existing shares outstanding (about 76 million). Investment bank TD Cowen analyzed that this would increase the total share count by 413%. Under this plan, the value of existing shareholders' stakes would be heavily diluted.
Also, if the existing 0% zero-coupon bonds are converted into new bonds with a 7% interest rate under this plan, Beyond Meat's interest expense would increase by $14 million (about 19 billion won) annually. Experts said investors appear to be taking this as an "unsustainable" signal and choosing to dump shares whose value has already hit bottom.
Amid praise in 2009 as a "future technology" that would save humanity from hunger and environmental pollution, Beyond Meat made a splashy debut on the Nasdaq in 2019. Beyond Meat's initial public offering (IPO) was cited as one of the most successful cases in more than 20 years. High-profile figures such as Microsoft co-founder Bill Gates and actor Leonardo DiCaprio personally invested in Beyond Meat.
Beyond Meat then set up a joint venture with PepsiCo and forged partnerships with major restaurant chains such as McDonald's, Burger King, and Dunkin', enjoying a winning streak. It earned the nickname "the Tesla of the meat processing industry." Celebrities including Kim Kardashian and various vegetarian influencers led a full-scale alternative meat craze in the U.S. consumer market, calling alternative meat a "new technology that would save humanity from a food crisis."
But when the pandemic hit, the bubble deflated quickly. Beyond Meat claimed it had replicated the taste and texture of beef to the point that people would not notice in a blind tasting (a tasting event where product exteriors are concealed), but consumers said Beyond Meat's products failed to match the texture and taste of real meat.
A price higher than beef also became an obstacle to mass appeal. Chief Executive Officer Ethan Brown himself acknowledged, "The fact that our products are more expensive than animal proteins has been particularly harmful in an environment where consumer sentiment is weak."
On top of that, shifting health perceptions delivered the final blow. The alternative meat market led by Beyond Meat grew on eco-friendly and vegan trends. However, as it became known that numerous chemical additives are used to mimic the taste of meat, criticism arose that it is an "ultra-processed food." Paradoxically, health-conscious consumers were the first to leave the alternative meat market. Neil Saunders, managing director at market research firm GlobalData, said in an interview with the Daily Mail, "Consumers perceive the alternative meat category as unusually unnatural and highly processed," adding, "The long-term outlook is generally skeptical."
In the end, even major partners that first extended a hand cut ties and removed Beyond Meat products from stores. Citing poor sales, McDonald's and Dunkin' halted supply of Beyond Meat products. In China, once expected to be the largest market for alternative meat, the company withdrew as of February this year.
Stock experts were extremely pessimistic about Beyond Meat's future. Beyond Meat has never posted an annual profit since its founding. After the end of the pandemic, losses ballooned like a snowball. Net loss, which was $53 million (about 7 billion won) in 2020, surged to $175 million (about 230 billion won) in 2021 and $343 million (about 460 billion won) in 2022. In the first half of this year, net sales also fell 15%, extending the unending slump. In Aug., Beyond Meat appointed a corporate restructuring expert as interim chief transformation officer (CTO) and said it would focus on expense reduction rather than growth.
Jerry Thomas, CEO of market research firm Decision Analyst, said, "Beyond Meat is suffering from issues of taste and texture, high prices, and an ultra-processed image," adding, "The chances of the company surviving are slim."