May 12 (Reuters) - Shares of Beyond Meat reversed
course to gain as much as 12% in volatile trading after opening
below their initial public offering price for the first time on
Thursday following the vegan meat maker's bigger quarterly loss.
Shares tumbled as much as 22% to a record low of $20.50 and
below the 2019 IPO price of $25. Trading in the stock was halted
multiple times in the first hour.
At 10:58 a.m. ET, Beyond Meat was up 7%, mirroring the
broader market that flipped course to trade higher.
Beyond Meat has seen its fortunes plummet in recent quarters
as it battled increasing competition and surging inflation that
has led Wall Street to fret over the possibility of the company
needing more cash.
"They've got over $700 million in cash so they're not going
bankrupt. The stock is down 87% from its high and I think people
are saying at this level maybe I give it a shot," Thomas Hayes
chairman Great Hill Capital in New York said.
"It's got enough margin of safety."
In the first quarter, cash used for operations surged to
$165 million from about $31 million a year ago, as the
plant-based meat pioneer diversified its product range.
"Beyond Meat's cost structure may be out of whack, and cash
may run out by the end of next year," J.P. Morgan's Ken Goldman
"We worry that management's outlook is a bit out of balance
with current realities."
On Wednesday, Chief Executive Officer Ethan Brown sought to
address the concerns.
"I wouldn't take this quarter's cash consumption and then
just kind of play it out and assume that we're out of cash based
on that," he said, adding the company was taking "several
measures" to reduce expenses.
So far this year, the stock is down about 60%.
About 42.1% of Beyond Meat's free float were in short
position as of May 9, according to Ortex data, just off of an
all-time high of 42.8% from last week.
(Reporting by Aishwarya Venugopal and Medha Singh in Bengaluru;
Editing by Sriraj Kalluvila)