On August 7, 2023, Beyond Meat announced its Quarter 2 financial results, which ended on July 1, 2023. At the end of Q2’23, the company reported its net revenue of $102.1 million, however, compared to Q2’22 that is a 30.5% decrease. According to the company’s financial report, the large decline in net revenue can be associated with a steep loss in the volume of products sold, specifically in the company’s U.S. retail and food service distribution channels. At the end of Q2’23, there was a 23.9% decrease in the volume of products sold in said distribution channels. An article published by CNBC shared that Beyond Meat’s shares fell 14% after the company reported weak sales, cut its full-year revenue forecast and retracted its original statement of becoming cash-flow positive in the second half of 2023. Despite this drop, CNBC mentions Beyond Meat recognizes the need to reinvigorate demand by fighting consumer perceptions. The outlet highlights that the company has struggled to gain consumer interest for two years and now has turned its attention to cutting costs to reach profitability (Lucas, 2023).
On a more positive note, the gross profit reported for Q2’23 was $2.3 million, or a gross margin of 2.2%, a significant difference compared to the company’s reported loss of $6.2 million, or a gross margin of -4.2%, in Q2’22. The gross profit and gross margin for Q2’23 were a direct result of Beyond Meat’s effort to lower operating costs and improve operations. Despite an unsatisfactory Q2’23 report, CEO and President Ethan Brown said, “While we are reducing our full-year 2023 net revenues outlook, we nevertheless expect a modest return to year-over-year top-line growth in the third and fourth quarters of 2023, and, relative to the first half of 2023, a meaningful reduction in cash consumption and an increase in gross margin” (Beyond Meat 2023).
Beyond Meat announced its Q2’23 results, and the company immediately faced skepticism and criticism from investors, financial analysts, the media and the general public. Stavros Georgiadis, an Equity Research Analyst focusing on the stock market, shared in an article from GuruFocus that “While its [Beyond Meat] shares have slightly recovered in 2023, they have recorded losses of over 60% over the past year.” Stavros shares his overall opinion of the brand’s future when he said, “I am not optimistic about Beyond Meat now as it has several important fundamental weaknesses and the second-quarter report was disappointing” (Georgiadis, 2023). He believes the highest risk for the company is the potential shift in consumer preferences. Currently, the demand for plant-based meat is apparent, but it has lessened over time since Beyond Meat entered the market. Therefore, if consumer preference shifts back toward meat, the company could be in danger. However, according to an article in the Los Angeles Business Journal, Ethan Brown believes that “despite current challenges of a nascent category and brand, we are highly confident that Beyond Meat is well positioned to play a leading role.” Additionally, Brown believes the desire for more plant-based food is not only inevitable but rapidly gaining urgency (Madler, 2023).
Investors became especially weary when Beyond Meat announced its forecasted 2023 revenue between $360 million and $380 million when it originally expected revenue of $375 million to $415 million, according to an article published by Reuters. CFRA Research Analyst Arun Sundaram said, “The guidance cut is disappointing, especially considering the decent start to the year. We are now back to talking about cash burn and the need to raise capital… something needs to change to prevent this ship from sinking” (Rajesh, 2023).
On the Q2’23 earnings call, Brown received backlash from financial analysts, questioning the future of Beyond Meat and Brown’s ability to reach its financial promises. According to AgFunder Network Partners, Brown stated on the conference call that he thinks Q2’23 was the most difficult period for the business (Watson, 2023). However, on November 2, 2023, Beyond Meat provided select Q3’23 financial results, further raising concern. According to a summary from GlobeNewswire, the company has made little improvement and is cutting its net revenue expectations yet again. Brown commented, “We anticipated a modest return to growth in the third quarter of 2023 that did not occur, reflecting further sector-specific and consumer headwinds.” He continued to say “Even as we implement measures to address those headwinds that are within our sphere of influence, we intend to pursue a further, sizable reduction of operating expenses to improve our cost structure” (GlobeNewswire, 2023). Due to the extreme adverse reaction Beyond Meat received upon announcing its Q2’23, it can be assumed that Q3’23 will be no different. Beyond Meat is under scrutiny to prove to investors that it can mitigate financial issues in the short term to reach its long-term goals of a successful plant-based future.
Disclaimer: All content included on this page is for academic purposes and has no affiliation with the Beyond Meat brand.
Jenna Kline 