Disclaimer: This content is intended for general informational and educational purposes only and does not constitute financial, investment, legal, tax or accounting advice. I make no representations or warranties about the accuracy, reliability, or completeness of the information provided. The author has a position in Beyond Meat (BYND). Please conduct your own research and/or consult with a qualified professional for advice tailored to your individual circumstances before making any investment decisions.

I remember 2019, I was in Greece for a friend's wedding, and Beyond Meat was the most anticipated IPO of the year. As both a vegan and a stock market investor, this was a company I was deeply passionate about. I sat by my phone on the Interactive Brokers mobile app for hours, waiting for the stock to finally open for trading to snipe it at first print.

The IPO was massively oversubscribed, and when it finally printed, it was far higher than the IPO price or where I thought it would open. Nevertheless, I jumped in, made a decent profit, and got out soon after. It was clear that even with its incredible growth prospects, the stock was already flying at a valuation that defied gravity. We were talking close to 100x EV/Sales.

For years, I’ve kept Beyond Meat on my watchlist, trading it from time to time—sometimes successfully, sometimes not. But what we’ve witnessed in the past couple of weeks is fascinating for an entirely different reason.

Beyond Meat has gone from a hyper-growth darling to a company struggling for its very survival, and in this fight for survival now gambles on both slides push it: short-sellers not giving up, and supports of the company wanting to keep it afloat.

Let's be clear: if you look at Beyond Meat through a traditional financial lens, the picture is bleak. From a fundamental standpoint, it walks like a duck and talks like a duck. The company is facing a perfect storm of operational and financial headwinds and was headed for bankruptcy, but a debt-for-equity swap now removed the bankruptcy immediate risk.

Beyond's main issues don’t look the be getting better anytime soon:

• The Growth Story Deflated: The initial hype suggested plant-based meat was on the verge of taking over the world. The reality is that while there is a strong community of vegans and vegetarians, plant-based eating has not yet become fully mainstream. Many curious consumers try these products but don't stick with them. With revenues on the decline, even with product innovation, any growth narrative has stalled so far.
• Vegan Ain’t Health, Necessarily: To mimic the taste and texture of real meat, many plant-based alternatives that are tasty, like a Beyond Burger, rely on ingredients like saturated fats. This has made some health-conscious consumers wary, limiting the addressable market.
• Intense Competition: The playing field is no longer empty. A wave of startups, particularly from Europe, are producing exceptional products that, in my opinion, surpass Beyond Meat in taste in many categories. While I still think their burger patty is best-in-class, many of their other products haven't kept me coming back. And I’m one of their key customers.
• Financial Issues: The food industry is notoriously competitive with razor-thin margins. Beyond Meat has been continuously loss-making and recently found itself on the brink of default. Now, they've engineered a complex debt-for-equity swap that, while saving them from immediate bankruptcy, has massively diluted existing shareholders (however, a positive, enterprise value hasn’t changes as there is no additional capital raising — for now)

Fundamentally, you're looking at a company with negative equity, negative cash flows, fierce competition, and poor growth prospects. This is not a stock you would typically want to hold. It’s actually what short sellers want: extrapolate the cash-flows and you get bankruptcy anytime soon, unless they manage to keep raising capital (somehow). But meme stocks are an entirely different animal.

So why is this interesting? Because the value of a meme stock isn't necessarily found on a balance sheet or the cash-flow statement. It’s found in the hearts and minds of its community. Think of GameStop, AMC, and now Beyond Meat. These are companies with powerful brand recognition that have fallen on hard times, and to top it all off, speculators are betting heavily on their demise. They operate more like cooperatives, where the customers are ok with chipping money in (accepting dilution as shareholders) to keep them afloat.

This is where the value truly lies:

1. The Real Value: An Iconic Brand: From a brand perspective, Beyond Meat is iconic. It was the very first plant-based meat company to make it big. If you want to rephrase this, it is th ‘Bitcoin’ of vegans. It was the first and won’t be allowed to fail. In a world where strategic buyers pay premiums for "better-for-you" brands that are loss-making like Poppi (PepsiCo and loss-making) and Alani Nutrition (sold to Celsius), Beyond Meat's global recognition holds immense, albeit difficult to quantify, value. If we apply a brand multiple of 3x sales to Beyond Meat's annual revenue of ~$326 million, its brand alone could be valued at nearly $1 billion. That brand equity is the company’s most valuable, and most overlooked, asset, which accounts for a huge portion of its current enterprise value.
2. The Power of a Believer Community: There is a large and vocal community of vegans and ethical investors who have a vested interest in seeing Beyond Meat survive. They believe the company provides a valuable, cruelty-free product. The sight of short sellers piling on to bet against its survival is infuriating for them, creating a powerful "us vs. them" dynamic. A prime example is Unprocessed Foods LLC, an affiliate of the mission-aligned Ahimsa Foundation, which provided Beyond Meat with a $100 million financing facility and now holds a significant equity stake (12.5%)  through Unprocessed Foods LCC, who was a creditor that accepted the debt-to-equity swap. For these supporters, this isn't just an investment; it's about backing a cause. It’s almost like a cooperative, where supporters feel a sense of ownership and are willing to weather the storm, even if it means paper losses.
3. A Different Kind of Venture Capital: In a way, meme stocks operate like publicly-traded venture capital investments. VCs often fund unprofitable businesses based on a hype-driven narrative of future growth. Meme stocks are similar, but with a twist. The businesses are often already successful in capturing consumer interest; they just struggle to be financially successful. The goal is to survive long enough on hype and community support to fix the underlying business.

This brings us to the core of the current situation. I find it baffling from a purely financial lens. If you are a short seller, why wouldn't you take your profits? Shorts had an unbelievable opportunity to cover their positions when the stock plunged to 50 cents following the debt-swap announcement, yet they didn't. Data shows that short interest climbed during the subsequent rally, now exceeding 100% of the float (pre debt-equity swap) 

It appears shorts are doubling down, perhaps for almost religious reasons, believing a cash-burning business has no right to survive in a capitalist society. Their thesis is simple: extrapolate negative cash flows and negative equity, and you get a 0.

On the other side, you have a community that believes in the brand's value and its mission. This isn't just about financials; it's a battle of ideologies played out in the stock market. You have to ask yourself: who is more of a gambler?

• The investor who believes a powerful brand and a loyal community can defy financial gravity?
• Or the short seller who is paying exorbitant borrow fees (fluctuating between 20% and 100%+) for a trade where the maximum gain is 100%, but the maximum loss is unlimited?

The dump to 50 cents was a golden opportunity for short sellers to cover their positions and lock in immense profits. Their bankruptcy thesis had paid off. Instead, they did the opposite. Why?

• The Psychology of a Flawed Thesis: It seems many shorts couldn't let go of their core thesis. "The company is still doomed," they likely reasoned, "this just delays the inevitable." They doubled down, believing the stock would eventually bleed back to zero. They were so convinced by the fundamentals that they ignored the technical and psychological storm brewing.
• The Asymmetric Bet: This behaviour is puzzling given the risk-reward. When you short a stock, your maximum gain is 100% (if it goes to zero), but your potential loss is unlimited. With borrow fees for BYND shares fluctuating between 20% and over 100%, shorts were paying a fortune for a bet with a capped upside and infinite risk.
• A Liquidity Mirage? I suspect high-frequency trading (HFT) played a role. HFT algorithms can turn one organic buy or sell order into 10-50 trades, creating the illusion of deep liquidity. Shorts who tried to cover may have discovered that the actual supply of willing sellers was far thinner than it appeared, causing any attempt to buy back shares to move the market against them violently.

This all begs the question: who is more of a gambler? The retail investor who believes in the power of a brand, or the hedge fund manager paying triple-digit interest rates to short a stock against a rabid community?

I have a long-position in BYND since shortly before the restructuring, believing the enterprise value would hold steady post-restructuring, especially since the new creditor-shareholders had no incentive to sell below that level. The subsequent drop to 50 cents shocked me, but it also highlighted the irrational panic that can create incredible opportunities. Anything below a price that allows former debt-holders to recover their capital seems unsustainable, in particular because these debt-investors could keep supporting the company with new debt post restructuring. 

Looking at valuation, it's not crazy to think Beyond Meat could command a valuation similar to  growth company if full-blown meme-mania kicks in. GME, AMC, OPEN all did it. . While its historical EV/Sales ratio has collapsed from a peak of nearly 80x in 2019 to around 4-5x today, this is in line (and even lower than) with many privately held alt-protein companies. The real, intangible value is the brand and community of customers, that supports the valuation, provided immediate bankruptcy risk is removed. So I believe this is fundamental ‘margin of safety’ with potential that cornerstone shareholders from the debt-to-equity swap would step in and support the company with liquidity to keep it afloat until fundamentals improve. Additional selling pressure below the $2-3 area is unlikely in my view, unless something fundamentally changes for the negative.

Personally, I want to see Beyond Meat trade at a 10-20x sales multiple, not because its fundamentals justify it today, but because a success story here would provide a much-needed tailwind for the entire plant-based industry, allowing other innovative companies to raise capital at decent valuations.

Fundamentally, the company walks and talks like a duck. But if a critical mass of people believe it can fly, it just might. The shorts are betting against this belief, taking on unlimited risk for a finite reward. The believers, including the company's new owners, are betting on a future where brand and mission triumph.

For Beyond Meat to truly take flight and reach a valuation of $10 or $20 per share, it would likely require a significant strategic catalyst, such as a partnership with a global food giant or a landmark deal with a major fast-food chain. But in the world of meme stocks, you don't always need fundamentals to win. Sometimes, you just need to be on the right side of belief.

Disclaimer: This content is intended for general informational and educational purposes only and does not constitute financial, investment, legal, tax or accounting advice. I make no representations or warranties about the accuracy, reliability, or completeness of the information provided. The author has a position in Beyond Meat (BYND). Please conduct your own research and/or consult with a qualified professional for advice tailored to your individual circumstances before making any investment decisions.