Beyond Meat (BYND) – Trade Idea

Company Description

Beyond Meat, Inc. offers plant-based burgers. The Company offers its products in a range of categories, such as The Beyond Burger, Beyond Sausage, Beyond Beef Crumbles and Beyond Chicken Strips. The Company sells a range of plant-based products across the three main meat platforms of beef, pork and poultry. It provides Beyond Mushroom Bacon Cheeseburger, Chef Spike’s Original Brat, Roasted Garlic & Italian Sausage Pasta, Beyond Beef Tacos and April Ross’ Butternut Squash Mac-N-Cheese. The Company also offers Beyond Spring Burger, Beyond Nacho Burger, Beyond Sausage Stuffed Peppers, Tuscan Style Beyond Sausage Pasta, Beyond Brat Breakfast Burrito, Beyond Beef Fiesta Power Bowl, Beyond Beef Nachos, Truffle Mac & Cheese Beyond Burger, Love & Lemons Guacamole Beyond Burger and Beyond Burger Tostada With Marinated Kale. Source: Reuters.

Charts

Trade Idea

Beyond Meat has had an eventful trading year since its IPO in early-May (offering price of $25). Shares of the faux-meat company have taken a >60% fall off its July 26 record high of $239.71. Ever since BYND shares have incurred strong downward momentum, facing relentless pressure from its descending key-moving averages. With that said, BYND’s 14-day Relative Strength Index (RSI) is sitting at 22. Indicating that the stock is firmly oversold. In other words, the shares are due for a counter-trend move.

We believe that such counter-trend move will be short-lived. Beyond Meat can go lower from here with the company’s IPO lock-up period ending on Monday. In addition, we believe that it is unlikely that Beyond Meat will be able to retain its current valuation as the competition in the faux-meat space is firming up. The product is non-defensible and moats are non-existent. 

Based on these factors and the fact that it is trading below a key level ($100), we like fading any counter-trend rallies. However do note that Beyond Meat, Inc. is expected to report earnings on 10/28/2019 after market close. If you are bearishly inclined you may want to consider a trade structure such as:

SideQtyExpStrikeType
Buy115 Nov90Put
Sell18 Nov90Put

PnL Graph

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