Why I've increased my price target on Beyond Meat (BYND)

Summary

The video explains why the presenter has increased the price target on Beyond Meat (ticker: BYND) from $3 to $6 per share, highlighting both technical market dynamics and fundamental business improvements.

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Market & Technical Analysis

Current Price & Trading Activity

• BYND is trading around $4.5 after hours, surpassing the previous $3 target quickly.
• Over 2 billion shares traded in one day, about 30x the company’s float, making it the most traded stock for three consecutive days.

Short Interest & Short Squeeze Dynamics

• Despite the rally, short interest remains high; 57% of daily volume was sold short.
• FINRA and Fintel data show short positions have not decreased; in fact, short interest may be rising.
• Former bondholders who received shares are calling back loans of shares, reducing shares available to borrow (down to zero from 10 million).
• Cost to borrow shares dropped to 45% annualized, indicating low lender willingness.
• Retail investors dominate the shareholder base, tend to sell options rather than lend shares, reducing supply for shorts to cover.
• Options volume surged 5x in one day, with nearly $200 million in put and call premiums traded during the rally—about 20% of BYND’s market cap.
• Call options expiring soon price the stock between $5.50 and $6.50, indicating market expectations of further gains.

Implications

• Shorts are forced to cover in a market where sellers prefer holding shares to collect high premiums (~10% weekly via options).
• This dynamic fuels the short squeeze and upward price momentum.

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Fundamental Business Improvements

Historical Context

• Before bankruptcy risk concerns (2022-2023), BYND traded at an enterprise value (EV) of approximately $2.5 billion (~$6 per share current count).
• At that time, the business was worse off:
  • Gross margin: -5% vs. +12% today
  • SG&A expenses: $230 million vs. $120 million today
  • EBITDA: -$300 million vs. -$120 million today
• Bankruptcy fears, not business deterioration, caused share price declines.

Debt Restructuring

• Convertible note holders converted $900 million of debt and issued $200 million new convertible notes, improving the balance sheet.

Product & Operational Enhancements

• Product reformulation:
  • Simplified ingredients
  • Switch to avocado oil base
  • Saturated fat down 60%, sodium down 20%
  • Improved taste and texture
  • Healthier, less processed products addressing consumer criticism
• Price reductions via Walmart expansion (value packs with six Beyond Burgers), improving affordability.
• Production costs decreased over 18 months, expanding gross margin from -5% to +12%.
• Walmart distribution expanded to 2,000+ stores, expected to boost Q4 and Q1 revenues and margins.
• Launch of “Beyond Test Kitchens” enables rapid product development/testing, reducing inventory risk (currently over $100 million inventory).
• Building direct-to-consumer (DTC) sales channel, improving revenue per unit and gross margins (wholesale discounts ~50% vs. retail).
• Company owns production, warehousing, and logistics infrastructure, facilitating DTC growth.

Profitability Outlook

• These improvements create a plausible path to EBITDA profitability for the first time in years.
• Historically, BYND traded at much higher multiples during IPO years, suggesting potential upside.

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Investment Framework & Recommendations

Price Target

• $6 per share floor based on historical EV and improved fundamentals.
• Short-term technical momentum could push price well beyond $6.

Risk Management Advice

• Caution urged for investors with large gains (5x, 8x, 10x) and concentrated positions.
• Suggested to trim positions by 5-15% to protect downside and convert some profits into risk-free capital while holding the remainder for potential further upside.
• No clear top for the rally can be predicted.

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Disclosures & Notes

• The presenter owns approximately 4% of BYND’s float.
• The analysis is not explicitly labeled as financial advice but includes cautionary notes on risk.
• The rally and volume dynamics are compared to early GameStop (GME) short squeeze events.
• The presenter thanks the community from Reddit and other forums for supporting the thesis since BYND traded at $0.50.

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Tickers, Assets, and Instruments Mentioned

• Ticker: BYND (Beyond Meat)
• Instruments: Shares, convertible notes, put and call options
• Sectors: Plant-based food, consumer packaged goods, retail distribution (Walmart)
• Metrics:
  • Price target: $6 per share
  • Current price: ~$4.5 after hours
  • Gross margin: from -5% to +12%
  • SG&A: reduced from $230M to $120M
  • EBITDA: improved from -$300M to -$120M
  • Convertible debt: $900M canceled, $200M new convertible notes issued
  • Options premiums traded: ~$200M (~20% market cap)
  • Shares traded in one day: 2 billion (~30x float)
  • Cost to borrow shares: 45% per year

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Presenters / Sources

• The video appears to be presented by an individual investor who has publicly disclosed a significant stake (~4%) in BYND and has been tracking the stock since it traded at $0.50.
• References to data sources: FINRA, Fintel, Palanteer (logistics system developer).
• Mentions community support from Reddit and other retail investor groups.

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Conclusion

The price target increase on Beyond Meat reflects a combination of a strong technical short squeeze setup and meaningful fundamental improvements in product quality, cost structure, distribution, and balance sheet strength. This supports a sustainable valuation floor of $6 per share with potential for further upside. Investors are advised to manage risk carefully amid the volatile rally.