Unusual Options Activity In Beyond Meat
Beyond Meat is a growth story, so it trades like a technology stock. When they reported their fourth quarter sales of $98.5 million, the number exceeded the highest analyst projection and helped push full-year revenue beyond expectations to $297.9 million. In addition, Beyond Meat also forecasted 2020 sales of $490 million to $510 million, also topping estimates.
Then there was news about Beyond Meat’s product being available in China through Starbucks. Beyond Meat CEO Ethan Brown had been talking about expansion in China for many months and how COVID-19 wasn’t going to derail those plans.
What also benefited Beyond Meat’s stock price in recent months was the closing of several meat plants in the country. For example, a Smithfield Foods shut its Sioux Falls, S.D., facility due to more than 200 employees testing positive for COVID-19. That particular plant is one of the largest pork processing facilities in the country and is responsible for processes 5% of pork in the U.S. And at one point, more than 150 of America’s largest meat processing plants operate near COVID-19 hotspots. Tyson Foods said it had indefinitely suspended operations at its largest U.S. pork plant to contain the spread of the coronavirus.
Not sure why I didn’t connect the dots, but the shortage in meats, made Beyond Meat a great alternative. There was one week in particular in April, Beyond Meat had its best week ever with the stock price surging 44%.
As of late, it appears the dominoes are starting to fall around Beyond Meat. Several days ago, McDonald’s said they were ending their trials of the Beyond Meat in Canada.
Beyond Meat plunged as much as 10% on Thursday after it was reported by CBC that McDonald's ended its Canadian trial of the plant-based burger in April with no plans to continue.
McDonald's told CBC news that it has no update on its Beyond Meat burger offering, and that it's "evaluating learnings" from the trial "to help inform future plant-based menu decisions."
McDonald's began to offer the P.L.T. burger, or plant-lettuce-tomato, in September of last year in several locations in southwestern Ontario. The test was conducted to see if the burger would be a viable option for its locations around the globe.
According to CBC, "McDonald's made no public announcements when the P.L.T. trial ended in April. It also removed information about the burger from its website with no explanation."
To add insult to injury, Impossible Burger, Beyond Meat’s biggest rival already sells the Impossible Burger in Burger King, launched its sausage product at Burger King today (on top of the roll out earlier this month of an Impossible Sausage breakfast sandwich at Starbucks).
Which all came to a head when Barclays double downgraded Beyond Meat, citing headwinds related to foods service channels being closed due to COVID-19.
NOTE: double downgrades are rare, usually a company gets a single downgrade at a time.
Today, I noticed the Smart Money taking advantage of the double downgrades when they bought over 7000 put options at the $120 strike price. But get this, those options expire at the end of the week.
I never like to bet against the Smart Money, with options that expire on Friday, this one is too close to the finish line, which is where I will be watching to see how things end.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted Using LeoFinance
