Investors have no beef with Beyond Meat despite poor earnings as shares soar

Apparently, blaming a weak earnings report on inflation isn’t such a bad strategy after all.

It certainly worked for plant-based meat maker Beyond Meat on Thursday as shares surged 18% even though the company issued a downbeat profit report late Wednesday.

The California-based company posted a larger-than-expected quarterly loss as rising freight and raw material costs eat into its margins, and the fake-meat purveyor said it expects further slowdown in demand for its products.

Consumers, impacted by decades-high inflation, have been curbing spending on discretionary products such as pricier plant-based meat products and preferring pocket-friendly animal meat.

“We are testing a pricing reduction that more quickly collapses the pricing delta between one of our core products and its animal protein equivalent,” CEO Ethan Brown said on an earnings call.

In October, Beyond Meat trimmed its full-year revenue forecast for a second time on softening demand, specifically in its refrigerated sub-segment. The company had also cut 200 more jobs to save about $39 million.

“It doesn’t look like the top line will get significantly better for Beyond anytime soon,” CFRA Research analyst Arun Sundaram said.

The company’s margins have been hit due to lingering industry-wide supply chain challenges, the Russia-Ukraine war and rising inflation.

Beyond Meat, which faces increasing competition from companies such as Tyson Foods and privately owned Impossible Foods, has also been heavily discounting its products, which has further pressured its margins.

Brown said the volume of competition in plant-based meat category has eroded some of Beyond Meat’s market share.

The company’s net loss widened to $101.7 million, or $1.60 per share, in the third quarter. Analysts on average had expected a loss of $1.14 per share, according to IBES data from Refinitiv.

Net revenue fell 22.5% to $82.5 million, missing analysts’ estimates of $98.1 million.