Beyond Meat's Stock Surge: Potential Short Squeeze, Analyst Ratings and Strategic Moves

In a remarkable turn of events, Beyond Meat, the renowned plant-based meat substitute company, has recently observed a surge in its stock, ostensibly due to a short squeeze, with a staggering 48% of its stock caught in the crossfire.

Despite posting a loss of 92 cents per share for Q1 2023 on a revenue of $92 million, which stands in stark contrast to analysts' expectations of an 86-cent loss per share on a $111 million revenue, the company's stock seems to be on an unexpected upswing. The company's projected revenue for 2023 falls between $375 and $415 million, aligning with the analysts' forecast of $395 million.

A crucial factor in this recovery is believed to be the company's strategic collaborations with major fast-food chains, notably McDonald's, as the venture into the fast-food market seems to have given Beyond Meat a much-needed boost.

The financial climate surrounding Beyond Meat's stock remains diverse, with banking giant J.P. Morgan maintaining an underweight rating on the stock. "There's no tangible indication of a consumer demand revival for the company's products and the company's outlook appears anything but conservative," stated Ken Goldman, a bank analyst. The outlook is not universally bleak, however; Mizuho’s analyst John Baumgartner presented a more positive take, stating, "We believe the management's drive and ambition will bolster multi-year revenue growth, surpassing what we've seen in the past three years." Baumgartner subsequently elevated the stock's target price from $11 to $20.

Earlier this year, Beyond Meat embarked on a fresh strategy aimed at improving sales and stock health, initiating the marketing of their products through the largest wholesale chain in the US, Costco Wholesale. However, it's worth noting that the company's stock is still trading about 65% below its May 2019 issue price. The last time Beyond Meat exceeded analysts' predictions was back in Q1 2020. As of now, Beyond Meat is valued at $824 million, despite the company's stock dropping 48% over the past year.

However, the recent uptick has caused significant discomfort for short sellers. According to data from S3 Partners LLC, Beyond Meat's short sellers incurred paper losses amounting to $60 million on Thursday alone, escalating total mark-to-market losses for the year to $156 million. Short sellers' woes are compounded by the fees they have to pay to bet against the food maker as available shares are rapidly diminishing.

In the past 30 days, short sellers sold approximately 7.5 million shares of Beyond Meat, elevating total short interest to $366 million, which corresponds to 49% of the float. As Ihor Dusaniwsky, managing director of predictive analytics at S3, commented, "There cannot be a huge rush of short selling in the stock and new stock borrows will be very expensive."

This combination of escalating losses and soaring borrowing costs puts traders betting against Beyond Meat in an increasingly precarious position. A short squeeze, where traders scramble to close out their opposing bets by purchasing shares of the stock they’ve bet against, leading to a rapid escalation in the share price, could be imminent.

Despite these challenging conditions, Beyond Meat's shares have surged by 21.2% to $13.00, and it seems the lack of company-specific news has not halted the stock's rise. The surge in share price has caught the attention of social media platforms, suggesting that Beyond Meat could be experiencing a short squeeze. With a total share float of 58.71 million, where a remarkable 43.07% of shares are sold short, the conditions for a short squeeze are ripe.

Beyond Meat's 20% leap on Thursday came as a shock to traders betting against the plant-based meat company, hinting at a potential short squeeze which could result in even steeper losses. With the high short squeeze score of 100 according to S3, it appears the traders betting against Beyond Meat are walking a financial tightrope, and the possibility of a short squeeze cannot be ruled out.

On a final note, it's worth mentioning that, according to data from Benzinga Pro, Beyond Meat's 52-week high stands at $9.81, and its 52-week low is pegged at $44.51. Given the volatility of the stock market, and the unpredictability of consumer behavior, the future of Beyond Meat's stock remains uncertain.