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Beyond Meat Tumbles After Announcing 3.25 Million Share Secondary Offering

Courtesy of ZeroHedge

Update: just as the stock was about to surge in the after hours, when the latest earnings report did not unveil any knock out blow and would have forced the company's massive short base to cover as a result of the 140% borrow cost (and 47% short Interest), making holding on to shorts extremely expensive, the company did the one thing that was certain to slam the price: it announced a secondary equity offering, consisting of a 3 million shares offered by selling shareholders, and a tiny 250K following on offering by the company, whose net proceeds will be used (i) to continue to increase its production and supply capabilities, (ii) to pay for marketing and promotional activities, and (iii) for general working capital purposes.

Here is the release:

EL SEGUNDO, Calif., July 29, 2019 (GLOBE NEWSWIRE) — Beyond Meat, Inc. (NASDAQ: BYND) (“Beyond Meat”), a leader in plant-based meat, announced today the commencement of an underwritten public offering of 3,250,000 shares of common stock, consisting of 3,000,000 shares of common stock offered by certain selling stockholders of Beyond Meat (the “Selling Stockholders”) and 250,000 shares of common stock offered by Beyond Meat. In addition, the Selling Stockholders expect to grant the underwriters a 30-day option to purchase up to an additional 487,500 shares of common stock at the public offering price, less underwriting discounts and commissions. Beyond Meat will not receive any proceeds from the sale of common stock offered by the Selling Stockholders. The offering is subject to market and other conditions, and there can be no assurance as to whether or when the offering may be completed.

Beyond Meat intends to use the net proceeds received by it from the offering (i) to continue to increase its production and supply capabilities, (ii) to pay for marketing and promotional activities, and (iii) for general working capital purposes.

Goldman Sachs & Co. LLC, J.P. Morgan and Credit Suisse are serving as lead book-running managers for the offering. BofA Merrill Lynch and Jefferies are also acting as book-running managers, and William Blair and Raymond James are acting as co-managers for the offering.

Those who had been following the company will recall that the stock's lockup period was set to expire on Oct. 29 but some had been speculating shareholders could sell shares earlier to capitalize on the stock's monster rally.

And that's precisely what happened:, because as disclosed after the close, Goldman and JPMorgan both announced they had "agreed to waive the lock-up restrictions applicable for the purposes of this offering" as well as waiving lock-up restrictions with respect to the selling shareholders, which include "certain of our officers and directors"

Who is selling stock in BYND, besides CEO Ethan Brown and the company's top 2 shareholders, Kleiner Perkins and Obvious Ventures? Pretty much everyone (source S-1, page 131). Needless to say, the CEO dumping shares ahead of the lock up expiration, is hardly a ringing endorsement of the stocks.

And so once again insiders win, Joe Sixpack loses.

The stock, predictably, plunged:

* * *

The numbers are in.. and they are positive (but it's all relative).

  • Q2 revenue printed $67.3 million (smashing expectations of $52.7 million) and up 2877% from the previous $17.4 million.

  • Q2 Adjusted EBITDA: $6.9 million, or 10.2% as a percentage of net revenues; up from a loss of $5.6 million in Q2, 2018

$14 Billion market cap Beyond Meat increased its full-year revenue forecast to $240 million (near the highest analyst estimate of $242 million)

The company has a solid cash buffer:

The Company’s cash was $277.0 million as of June 29, 2019 and total outstanding debt was $30.5 million. Net cash used in operating activities was $22.4 million for the six months ended June 29, 2019.

Capital expenditures totaled $7.5 million for the six months ended June 29, 2019 compared to $10.0 million for the prior-year period.

Adjusted EBITDA to be positive compared to prior expectations of break-even Adjusted EBITDA.

“We are very pleased with our second quarter results which reflect continued strength across our business as evidenced by new foodservice partnerships, expanded distribution in domestic retail channels, and accelerating expansion in our international markets. We believe our positive momentum continues to demonstrate mainstream consumers’ growing desire for plant-based meat products both domestically and abroad,” said Ethan Brown, Beyond Meat’s President and Chief Executive Officer.

“Looking ahead, we will continue to prioritize efforts to increase our brand awareness, expand our distribution channels, launch new innovative products, and invest in our infrastructure and internal capabilities in order to deliver against the robust demand we are seeing across our business.”

Beyond Meat closed down 5.4% ahead of earnings, its biggest decline since June 24, and notably – despite the huge beat and upside outlook – traders are not being squeezed to death yet…

What happens next?


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