Meat alternatives are getting a big public market debut with the Beyond Meat public offering, as shares of the company rocketed above their initial list price.
The company’s shares surged up 135% in their market opener, valuing the company as high as $3.52 billion. Volatility was so high on the company’s stock that the Nasdaq had to pause trading of “BYND” shares.
The company’s first trade came in at $46 at 12:18 p.m. Eastern, according to a report in MarketWatch. That’s a whopping 76% above the initial price. Gains extended throughout the morning reaching an intraday high of $63.43 (or around 154% above its initial high) and the stock is now trading at around $55 per share.
The company priced its public offering at $25 per share last night — at the upper end of an already increased share price (likely in response to shareholder demand).
In all the company raised more than $240 million at just under a $1.5 billion valuation through the sale of at least 9.6 million shares when it priced yesterday.
“Beyond Meat is a pioneer of the plant-based meat movement, and the listing is a remarkable and unprecedented move for the industry,” said Bruce Friedrich, the executive director of the sustainable food industry research and watchdog group, the Good Food Institute. “While it’s the first company of its kind to go public, the move could pave a way forward for other plant-based meat makers who will be watching on.”
Investor appetite for the company comes despite its balance sheet problems. Beyond Meat reported a net loss of $29.9 million on $87.9 million in revenue for 2018.
What’s steeling investors’ stomachs for an investment in the company appears to be its gross margins, which came in at 25% for the first quarter and were at 20% for 2018 up from negative margins in the preceding year.
The company’s success could be a harbinger of things to come. There’s a crop of meat substitutes and alternative protein products on the market or coming to market — and they’ve met with enormous customer success.
Earlier this week, Burger King announced that it would begin a nationwide rollout of its Impossible Whopper, and companies like Memphis Meat, which develops lab-grown animal proteins, and Sustainable Bioproducts, another developer of protein replacements are waiting in the wings to bring their own products to market.
Beyond Meat’s public offering is the second-highest liquidity event for a company in the sustainable foods market. The largest was WhiteWave Foods acquisition for $12.5 billion by Danone in 2017 after a public listing five years earlier.
“Securing funds like this is a big deal for Beyond Meat and will allow it to ramp up its supply chain capabilities and make delicious plant-based meat accessible to all,” said Friedrich in a statement. “Investors recognize that this is not a niche but a mainstream movement and a huge business opportunity… Beyond Meat is on the frontier of food system transformation. Their success and the successes of other plant-based meat makers could help repair our food system and mitigate the many harms caused by conventional meat production.”
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