Beyond Meat (NASDAQ:BYND) has surged in recent times, reigniting speculation of a short squeeze in the plant-based meat maker.
Shares of Beyond Meat (BYND) had nearly doubled in value by midday on Monday in heavy volume trading. BYND stock has lost over 3% of its value so far this year. At the time of writing, the stock was up 97% in premarket trade.
Short interest on BYND was over 50% of the float as of Wednesday.
Although demand for plant-based meat has been less than enthusiastic, Beyond Meat (NASDAQ:BYND) shares have accrued outsized gains over the past few days on very heavy volume. The firm has been struggling on multiple fronts in recent times.
“A recent stock rally appears driven by a short squeeze, not fundamentals, as BYND’s valuation now fully reflects its difficult turnaround prospects,” SA contributor Joseph Parrish said.
“BYND’s high debt load was partially addressed by restructuring, but the company remains unprofitable and struggles to cover operating expenses with current sales volume,” Parrish added.
Seeking Alpha contributor Elephant Analytics wrote in their October 17 article that even though the company is reducing its net debt by over $800M through its recent debt exchange offer, they still believe that the intrinsic value of its common stock is zero.
The meteoric advance is largely attributed to a short squeeze after the company completed a debt-for-equity swap last week.
The stock had collapsed sharply following the announcement and early settlement of a debt exchange deal that significantly diluted existing shareholders and increased the company’s debt burden. However, a couple of days after that, the firm witnessed a massive surge in its stock price.
The last couple of weeks have been quite volatile for the company, with shares surging as much as 146.26% and falling as low as 48.51% in the period.
The company’s (BYND) net revenue was down 15% in the first six months of this year.
The SA Quant rating system gives the stock a Strong Sell rating, with the lowest factor grades assigned to profitability and momentum.
SA analysts rate the company at Sell.