Plant-based burger maker Beyond Meat Inc.’s stock fell on Thursday after the company said it planned to raise prices in the US to counter a decline in sales.
Chief Executive Officer Ethan Brown’s turnaround strategy largely rests on Beyond Meat’s latest reformulated burger and beef products, which the company is promoting as healthier than previous versions. The burger, which Brown referred to as a “home run” on a call with analysts, will cost more at the supermarket, which he expects will help improve profitability. The company is also reducing its operating costs.
Michael Lavery, an analyst at Piper Sandler, wrote to clients that the higher prices are “a risky solution” and could keep new consumers at bay. The most important attribute for consumers is taste, Lavery noted, and while the latest product represents “modest” improvements on that front, “we do not believe Beyond has the pricing power to raise prices further without risking destruction of demand growth.”
Beyond Meat shares fell 13% at 10:04 a.m., the most intraday in two months. The stock has lost about 20% so far this year.
The El Segundo, California-based faux meat manufacturer on Wednesday posted first-quarter sales that met market expectations. Revenue declined across the business as consumers grapple with high rates of inflation and interest in plant-based meat wanes. Brown attributed the downturn to “macroeconomic conditions,” higher-than-expected discounts, category softness and “sustained misinformation campaigns.”
(c) Washington Post