Although the concept of plant-based meat resonated deeply with young consumers more focused on personal health and wellness than arguably prior generations, that sentiment only temporarily bolstered Beyond Meat (BYND). Since the early summer of 2021, BYND stock has looked exceptionally ugly. Nevertheless, a small bit of hope exists for intrepid contrarians.
Obviously, just a cursory glance at the framework for BYND stock imposes an ominous cloud. Since the beginning of this year, shares have slipped more than 23%. In the trailing one-year period, BYND gave up more than 40% of equity value. And if we’re going to go back to its first public session, Beyond Meat cratered almost 86%.
If that wasn’t horrific enough, the financial backdrop offers little indication that BYND stock is ready to spark a meaningful comeback. Last month, the underlying company posted revenue of $102.1 million in the second quarter, missing the analysts’ consensus target of $108.4 million. As well, this figure represented a year-over-year loss of 30.5%, reflecting sharply eroding demand.
In fairness, stubbornly high inflation casts a dark cloud over consumer sentiment, impacting other food producers. At the same time, many if not most of the major food-producing entities enjoy economies of scale and can better weather inflationary pressures. The same can’t quite be said about Beyond Meat, as evidenced by its disappointing financial performances.
Nevertheless, it’s also possible that as MarketBeat contributing author Thomas Hughes pointed out prior to its Q2 results, BYND stock could be at an inflection point.
Big Block Options May Hint at a Recovery in BYND Stock
According to Hughes, back in July, the technical analyst stated that a critical resistance point near $22 developed against BYND stock. As well, the expert identified $12 as a possible bottom. Therefore, if the Q2 results proved encouraging, a break above the $12 to $22 range would be bullish. Logically, anything below would be bearish.
With the benefit of hindsight, we now know where the market went with BYND stock. Still, another detail is important. Hughes mentioned that at time of publication, short interest ran about 40%. Based on the latest data from MarketBeat, the percentage of BYND’s float shorted stands at 38.3%. Additionally, the short interest ratio clocks in at 9 days to cover.
So, many speculators are still incredibly short against BYND stock, which could lend itself to a surprise upswing. Granted, I’m not suggesting that Beyond Meat is a legitimately sound investment you can sleep easy on at night. Rather, for the daring high-stakes gambler, it’s not inconceivable that BYND could swing higher on an emotional catalyst.
All it takes is a moment of panic. And that might stem from institutional speculators.
Looking at Fintel’s options flow screener – which exclusively targets big block trades likely made by institutions – the most recent significant transactions in the derivatives market were for bullishly leaning trades. What’s more, a trade that occurred on Sept. 26 caught many folks by surprise.
On Tuesday, an institutional trader (or traders) sold (wrote) 600 contracts of the Jan 19 ’24 45.00 Put. Two factors immediately pop out. First, since BYND stock closed at $9.50 in the open market on Wednesday, the sold put is deep in the money (ITM). That appears incredibly aggressive.
Second, the premium received for writing these puts came out to $1.78 million. As well, this premium represented an 11.55 standard deviation above the mean, which overshadows most other recent transactions.
Still, with the implied volatility (IV) rising from 177.35% on Sept. 1 to 194.56% on Sept. 25 – one day before the transaction – the trader apparently decided to sell the risk, much like a baseball manager going to the bullpen to secure the win.
A Possibly Shrewd Maneuver
When looking at the entire course of a baseball game, it’s easy for the crowd to question key managerial moves. Undeniably, the decision to replace the starting pitcher – especially if the pitcher is on a great streak – presents controversies. Still, if the move turned out to be the right one, the manager is praised the next day.
And that might be what’s going on here. On Sept. 27, BYND stock popped up 1.4% against the backdrop of a slow day on the Street. In turn, IV dipped from 210.09% on Sept. 26 to 187.01% on the midweek session.
Of course, it’s far too early to say that BYND can move up from here. At the same time, if a bullish impetus materializes – even if it’s in perception and not necessarily in reality – Beyond Meat just might rise above.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
