Beyond Meat Valuation!

Dear Reader,


Beyond Meat, Inc. the vegetarian ''meat'' company is the stock of the moment up nearly six times  from its debut price on the floor of the Nasdaq stock bourse and trading at 69 times Price-to-Sales ratio and 8 billion USD valuation. Beyond Meat is loss making with a profit margin of -26.73%

Is the high valuation tag justified? What is the intrinsic value of Beyond Meat Inc.?

I think in the short run Beyond Meat is worth around 4 billion USD. In the long run, in 5 years the company may well be worth 7 billion USD.

Why? It all depends on how Beyond meat cracks the vegetarian market or the market for processed meat which is worth  1.058 trillion USD as of 2019 according to Statista. According to various sources there are 375 million vegetarians worldwide or around 5% of the world population. If we extrapolate, 5% of the 1 trillion USD processed meat market gives 50 billion USD market for burger patties made of plants and fruits, which is loosely what Beyond Meat produces. If beyond meat takes let's say 30% of this market this gives 15 billion USD of revenue. If Beyond Meat reaches this revenue run rate, a 20 billion USD valuation or 2.5 times the current price seems reasonable.

If I have to put a number on it, I would say Beyond Meat will be worth 7 billion USD in 5 years. 30% market share of the vegetarian market as a whole is tough to reach. There are many competitors now and many emerging or to emerge. Companies that have 30% or more of their market are far between - mainly technology companies like Microsoft, Intel, Cisco, Google etc. It is very tough to get more than 10% in any industry, especially mature ones like the nutrition industry.

There is of course the wild card that many meat eaters switch to Beyond Meat products because of taste, novelty, animal care and other reasons. Then the valuation of Beyond Meat could well explode to something like 20 billion or 30 billion USD. Exactly this crazy scenario is partly reflected in Beyond meat Price/Sales ratio of nearly 70.

But as I already availed, I think Beyond meat will be worth 7 billion USD in 5 years. Why? Because simply Beyond Meat revenue is growing like crazy. Beyond meat realized 88 mln. USD in revenue in 2018 compared to nearly 33 mln. USD in 2017 or 160% growth rate which is staggering from a company that is making tens of millions of United States dollars in revenue. Beyond Meat could simply grow into a valuation of 7 billion USD.

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Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

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Kind regards,

Petar Posledovich