Beyond Meat IPO sees shares soar by more than 160%

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Shares of vegan burger maker Beyond Meat rose more than 160 percent in their market debut on Thursday, as investors look to cash in on the first publicly listed veggie meat company and the growing popularity of plant-based meat alternatives.

The stock opened at 46 U.S. dollars, well above its IPO price of 25 U.S. dollars. Shares surged minutes after starting to trade and were halted due to volatility. They traded up to 72 U.S. dollars during the day, before closing at 65.75.

Beyond Meat, which has warned it may never turn a profit, closed with a market capitalization of around 3.8 billion U.S. dollars.

Earlier on Tuesday, the company raised the size and price of its offering after increased demand from investors. The IPO raised 240 million U.S. dollars.

The money raised from the IPO gives Beyond Meat firepower to compete with other rivals in the increasingly crowded imitation meat market, such as Silicon Valley startup Impossible Foods Inc.

Beyond Meat founder and Chief Executive Ethan Brown told Reuters on Thursday the proceeds would be used to expand marketing efforts, develop new products, establish production centers in Europe and Asia and open additional manufacturing facilities in the United States.

Ethan Brown, founder and CEO of Beyond Meat, speaks during an interview at his company's IPO at the Nasdaq Market site in New York, U.S., May 2, 2019. /Reuters Photo

The Los Angeles-based company, which counts actor Leonardo DiCaprio and Microsoft founder Bill Gates among its investors, aims to market its meatless burger patties and other products to meat-loving consumers. It avoids terms such as vegan or vegetarian and instead displays its products in the meat case of supermarkets.

Plant-based substitutes for meat have been gaining popularity as more people shift towards vegan or vegetarian diets, amid growing concerns about health risks from eating meat, animal welfare and the environmental hazards of intensive animal farming.

Currently, some 70 percent of the company's revenues are generated by its flagship Beyond Burger patties. The company also sells imitation sausages and vegan ground beef.

But Beyond Meat said it has struggled with production capacity issues in the face of growing demand, and interruptions in the supply of pea protein, which it currently sources from two producers in Canada and France.

Rival plant-based meat producer Impossible Foods teamed up with Burger King earlier this year to launch vegan products in stores across the United States as part of a trial.

In 2018, some 50 million U.S. dollars of Beyond Meat's revenues came from retail sales, including at Amazon.com's Whole Foods Market and Kroger Co supermarkets, while some 37 million U.S. dollars was generated at restaurants.

Brown said the company planned to expand its network of restaurant and retail partners outside the United States, which currently account for seven percent of revenues but declined to provide further details.

The meat substitute industry is already worth an estimated 4.6 billion U.S. dollars, according to Markets and Markets, a research firm which sees the sector growing to 6.4 billion U.S. dollars by 2023.

Asia is set to be the primary driver of that growth, with companies like Impossible, JUST and Beyond Meat all focusing on China.

Hong Kong Special Administrative Region has been used as a testing ground for these companies, ahead of releasing their products in the Chinese mainland.

Impossible Foods rapidly expanded its distribution from five to over 100 stores in Hong Kong in the past year, while Beyond Meat plans to launch in the mainland later this year, after witnessing its Hong Kong sales jump by 300 percent in 2018.

(Top image: Reuters Photo)

Source(s): Reuters