Beyond Meat’s shares fell below $1 on Tuesday, alarming investors over the company’s strategy to address its debt by issuing additional shares. The plant-based meat manufacturer has faced ongoing challenges, with net revenues down 15% in the first half of this year, exacerbating concerns about its financial health.
On Monday, the El Segundo, California-based company announced that most holders of its convertible notes had approved a plan aimed at reducing its debt by $800 million and extending the maturity of that debt. As a part of this restructuring, Beyond Meat plans to exchange debt due in 2027 for $202.5 million that will mature in 2030. Additionally, it intends to issue as many as 326 million new shares, a move that has sparked anxiety among investors due to the potential dilution of existing shares.
The stock closed at $1.04 on Monday but opened at 92 cents on Tuesday, reflecting a 12% decline in mid-day trading. Companies listed on Nasdaq face the risk of delisting if their stock remains below $1 for 30 consecutive days. Beyond Meat’s stock has plummeted 73% since the beginning of the year.
Once heralded as a pioneering force in the plant-based meat sector following its IPO in 2019, Beyond Meat attracted high-profile investors, including Microsoft co-founder Bill Gates and actor Leonardo DiCaprio, and was poised for global expansion. However, U.S. consumer interest has waned, with many individuals expressing dissatisfaction with the taste and ingredient list of its products. Inflation-related price increases have compounded these issues. Although the company launched a healthier iteration of its iconic burgers in 2024, it failed to drive significant sales growth in the U.S. market.
Conversely, demand for Beyond Meat products has seen more success in Europe, particularly through partnerships with major fast-food chains like McDonald’s, which offers its plant-based burgers and nuggets. Despite this success abroad, U.S. fast-food establishments have been hesitant to incorporate Beyond Meat offerings into their menus. Additionally, the company suspended operations in China earlier this year due to disappointing sales.
During an investor conference call in August, Beyond Meat’s founder and CEO, Ethan Brown, shared the company’s vision to strengthen the “Beyond” brand identity, emphasizing a shift away from solely replicating animal products and expanding into diverse protein offerings. There is a cautious optimism that this strategic pivot may open new avenues for growth in the evolving food landscape.