Dive Brief:
- Beyond Meat was sued by investors last week who claimed the publicly traded plant-based meat company misled them about itsmanufacturing capacity and growth outlook.
- 零售批发百货公司工会的地方338 Retirement Fund filed the securities class action lawsuit. They argued the company as a whole and CEO Ethan Brown; former CFO, Treasurer and COO Mark Nelson; and former CFO Phillip Hardin — individually named in the litigation — “made materially false and misleading statements and omissions, and engaged in a scheme to deceive the market. These misleading statements and omissions artificially inflated the price of Beyond Meat stock and operated as a fraud or deceit” on investors.
- Beyond Meat has seen great peaks and low valleys since itsIPO in May 2019. The company debuted on the stock market at $25. It peaked at $234.90 at the end of July 2019, and was trading at $10.68 early Monday afternoon. Beyond Meat did not respond to requests for comment on the litigation by press time.
Dive Insight:
Beyond Meat was one of the hottest stocks of the year when it made its market entry in 2019. In just a few months, the company surged to a share price more than nine times higher than its IPO price.
After a series of ups and downs, the company’s shares startedto trend downward starting in mid-2021, the same timeretail consumption of plant-based meatbegan to recede.
The class action lawsuit covers investors who had holdings in the company between May 5, 2020 — when the share price was $100.50 — and Oct. 12, 2022 — when it was $14.11.
The lawsuit says Beyond Meat had been boasting about success with product tests with prominent QSRs, including McDonald’s, Starbucks, KFC, Pizza Hut and Taco Bell. The company also assured investors and partners that it would “ensure manufacturability” through “extensive testing” and could produceits products at acommercial scale. Any delays toward reaching QSR partnership goals, the lawsuit said, were blamed on the changed consumer patterns during the early days of the COVID-19 pandemic.
But, the lawsuit continues, “the truth began to emerge” on Oct. 22, 2021, when the companyreduced its net revenue outlookby up to $34 million, or 25%. The company also said its expenses and inventories were rising. When Beyond Meatreported its quarterly earningsweeks later, other details about sales decreases and unsold inventory were shared.Its stock price fell nearly 20%.
A week later,Bloomberg published an articlethat looked at internal production execution challenges, specifically when it came to the relaunch of Beyond Chicken. The article pushed theshare price down further, the lawsuit claims.Reporting in December 2021about the cancelation of a plant-based carne asada test at Taco Bell also led to further declines inthe company’s stock, the lawsuit claims.
And, the lawsuit states, last October’selimination of 200 jobs— includingthree executiveseither losing their jobs or choosing to step down — put further pressure on its shares.
The lawsuit also points out that Nelson, whoretired from Beyond Meatin May 2021, but had a contract to serve as a consultant until this month, sold 440,000 shares of the company’s stock during the time period and made more than $58.3 million in proceeds.
The litigation does not state how large the retirement fund’s stake was in Beyond Meat, or whether it still owns shares. The lawsuit asks the court to determine adequate damages for their losses.
In itsmost recent earnings reportlast week, Brown told analysts Beyond Meat is “turning a corner,” with less operating losses during the quarter — though it also sold fewer products. The company alsoannounced an equity offering programfor up to $200 million.
