Shares of Beyond Meat (NASDAQ: BYND) closed 5.62% lower last week as the price action struggles to recover from a sharp selloff that started in October.
Fundamental analysis: Industry challenges to remainThe plant-based meat industry has seen growth in demand and even though it is expected to keep rising, analysts believe the industry still has to face certain obstacles in some parts of the world.
Data by Google Trends showed that search interest for “plant-based meat” has significantly surged last year, prior to Beyond Meat’s IPO. The plant-based meat industry is worth roughly $20.7 billion and is expected to reach $23.2 billion by 2024, market research firm Euromonitor said.
Some of the factors that have been driving the industry’s growth include concerns over animal welfare, coronavirus pandemic and food security.
“In this era of shocks and instability, building a low-risk value chain means focusing on where the opportunities are, and the shift towards plant-based meat shows no signs of slowing down,” said Elaine Siu, managing director of The Good Food Institute Asia Pacific.
Simon Powell, global chief of thematic research at Jefferies Group said if a single plant-based meat company faces a problem with their products that would lead to recalls, it could easily spook and repel customers.
“This is a big ‘if’ … but if they were to have a big recall of a product, then that might dent consumer confidence,” Powell said. “At some point, you’re going to get these events. That’s going to set the industry back a bit.”
He also pointed out that the so-called “Instagrammability” of these products is one of the factors fueling the growth of the plant-based meat industry around the world. Powell said that if the novelty of these products starts fading away, it could curb the further growth of the market.
Technical analysis: Shares struggleBeyond Meat stock price closed the last week lower to swing into the red territory for December. Shares fell modestly in November after tumbling nearly 15% in October. Compared to the October highs, shares are trading over 30% in the red.
Beyond Meat stock chart (TradingView) Looking in the short-term, BYND is trading in a wedge with a risk titled to the downside. In this case, the initial support line is located at $130.55 (the 200-DMA line), in addition to the ascending trend line located around the $125 handle. Any move to the $120 – $125 zone is likely to be seen as an opportunity to invest in BYND shares.
SummaryDemand for the plant-based meat industry has increased and while it is set to continue growing, analysts think the industry still has to overcome certain challenges.
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