UK buyers are piling into Past Meat (BYND) inventory and seeing large features. Ought to I purchase too?

In latest days, UK buyers have been aggressively shopping for inventory in Past Meat (NASDAQ: BYND). Consider it or not, that is the fourth most purchased inventory on AJ Bell’s platform over the past week.

Ought to I comply with the group and purchase this development inventory for my portfolio? Let’s focus on.

I used to be proper about this inventory up to now

It’s been a very long time since I coated this one. Over three years, the truth is.

The final time I coated it, in August 2022, it was buying and selling for $33. On the time, I stated it was very dangerous as demand for plant-based meat was dwindling.

Earlier this month, the inventory traded as little as $0.50. So, it’s truthful to say that it has been a poor long-term funding (and that my view on the inventory was proper).

The brand new meme inventory

In latest days, nevertheless, it has exploded increased. At one stage, it was buying and selling close to $7.70.

There are a few causes for the surge within the share value.

First, the corporate has signed a brand new distribution cope with US retail powerhouse Walmart. In keeping with Past Meat, Walmart might be among the many first nationwide retailers to supply the brand new ‘Past Burger 6-Pack’.

Second, it’s been overrated on Reddit (it’s grow to be a meme inventory). It’s additionally been added to the Roundhill Meme Inventory ETF.

It’s price noting that this inventory has been closely shorted just lately (like GameStop a couple of years in the past). In different phrases, a number of refined buyers, comparable to hedge funds, have been betting in opposition to the inventory.

When a heavily-shorted inventory out of the blue sees a excessive degree of investor shopping for, it will possibly ship the share value sharply increased. As a result of when shorters want to shut their positions they’ve to purchase shares to take action — brief sellers borrow inventory from brokers after which promote them, hoping to purchase them again at a cheaper price.

Ought to I purchase?

Now, I don’t thoughts the occasional plant-based meat-like burger. I’ve tried Past Meat’s merchandise up to now they usually’re first rate.

However trying on the fundamentals right here, they appear very weak, for my part.

For a begin, gross sales are falling. This yr, analysts count on income of $282m, down from $326m final yr.

I believe one difficulty right here is that Past Meat’s burgers are costly. Throughout Covid – when plant-based meat merchandise took off – shoppers had plenty of disposable revenue. Immediately, they don’t. So, I’m not assured about gross sales development right here.

Moreover, there are not any earnings. This can be a firm that simply frequently loses cash.

Final yr, its web loss was $160m. This yr, it’s anticipated to be $148m.

On high of all this, the corporate has a ton of debt on its books. This provides plenty of threat.

Given the weak fundamentals, I gained’t be becoming a member of different UK buyers and shopping for the inventory. I think that as quickly as speculators lose curiosity right here and transfer on to the following shiny factor, its share value will fall.

For my part, there are significantly better development shares to purchase in the present day.