Beyond Meat, the leading plant-based meat alternative company, reported its Q4 earnings on Tuesday after market. The stock was a powder keg waiting to happen as its low float and high short interest set it up for a squeeze.
Traders should expect some profit taking as the company"s outlook was disappointing. The comments around cost-control and managing margins are positive but management will need to prove it can achieve these goals in coming quarters.
The company reported a loss of $2.40 per share , which may not be directly comparable to the consensus estimate of an 89-cent loss as the Q4 loss included various non-cash charges. Revenue for the quarter fell 8% to $73.68 million, beating estimates of $66.7 billion.
In the earnings call, Beyond Meat provided guidance for the first quarter of 2023, expecting revenue of $70-75 million, which is significantly below consensus estimates of $89 million.
The company also issued full-year guidance, expecting revenue of $315-345 million, which places the $330 million midpoint below analysts' target of $344.4 million.
Beyond Meat announced plans to significantly reduce operating expenses, adjust pricing, and right-size its production footprint in support of margin expansion. The company is also focusing on a years-in -the-making core platform renovation that delivers superior health benefits and taste.
Beyond Meat's CEO, Ethan Brown, expressed confidence in the company's 2024 plan, emphasizing the need to reduce operating expenses and cash use. He also highlighted the company's pricing actions and right -sizing of its production footprint to support margin expansion.
Investors reacted positively to the post-earnings announcement, sending Beyond Meat stock soaring 71% in late trading. The move was facilitated by the low float (61 mln) and high short interest (38%).
Beyond Meat's earnings report and post-earnings announcement indicate a company focused on operational changes and cost reduction to drive margin expansion and profitability. While the downside guidance may be a short-term concern, the company's long- term vision and commitment to product improvement may be a positive sign for investors.
As the plant-based meat alternative market continues to grow, Beyond Meat's ability to execute on its operational changes and product improvements will be key to its long-term success. Investors will be closely watching the company's progress in the coming quarters.