Beyond the fake

I told friends before its earnings that I was shorting this stock. I said I was expecting a tsunami selloff following its earnings that was doomed to be disappointed. While it did fall as much as 15% and ended up the day by a sizable -12% plummet from $222 to 195, I was expecting to see a 20-30% or more fallout in responding to its earnings. For my short bet though, I was happy for it to fall below $200. You probably can guess already what I’m talking about. Yes, the famous company for faked meat, Beyond the Meat (BYND).

But let me be very clear, I’m not by any means against this business. On the contrary, I like this business for faked products. After all, from the medical point of view, this is a good trend to have more vegetable-based products to help people eat more healthily. So I applaud this company to fake the meat although I have never tried and don’t know how it tastes. Personally I will just stick to the fresh veggies and Tofu products. So this is a real business with good future and I hope it can succeed in the future.

From the investing perspective, you can also argue that this stock has already been very successful. After all, rarely you can see any stocks that can jump nearly straight-line for weeks after its IPO with a mindboggling 800% gain. The problem is by any means this is clear bubble for it. It is trading 100 times its revenue when it is still losing money. Regardless how much you appreciate its future, this can not be sustainable. It is simply against the economic law! I think unintentionally BYND is creating another faked product and this time the euphoric bubble that cannot never be materialized and is doomed to fail. It is just a matter of time, not if, if there is any financial and economic sense in this world. So here comes with my prediction: I bet BYND will see its price cut by half in the near future. I very well know I could see a lot of eggs on my face with this prediction as there is so much hype building up for it and nearly everyone is chasing it whenever it comes down a bit but that’s really one of the biggest risks I can see. It was a brutal week for BYND for sure as it closed at 177 today, a 26% haircut from its peak just in 3 days! Very likely we may start to see some buying or bottom fishing next week or so and it could bounce back towards $200ish. But I think its another leg down towards $100 will follow soon.  

Feel free to chase it at your own cost!!