When you take a look at shares of plant-based meat substitutes producer Beyond Meat, you would have a hard time thinking there is a chance of the company’s stock hitting zero. But according to research firm New Constructs, this is a real possibility.
In a note released on Tuesday, New Constructs CEO David Trainer said that Beyond Meat is burning through cash on an alarming note. Also, big expenses are further putting the company on thin ice.
“Beyond Meat must dramatically cut costs and lower its cash burn, or it will go bankrupt,” said Trainer. “Companies with heavy cash burn and little cash on hand are risky in any market, but especially now.”
Trainer points out that Beyond Meat went through $635 million in free cash flow in 12 months, concluding with the first quarter of 2022. With just $548 million in cash and cash equivalents on the balance sheet after Q1, the company now has to raise additional capital if it wants to stay in business.
Beyond Meat closed at $33.28 per share on Tuesday, which represents a one-day gain of four percent. However, this is nowhere near enough to get optimistic about Beyond Meat stock, considering it is almost 50% down year to date and 72.84% down compared to the same period in 2021.