Is Buying Beyond Meat's Stock a Good Investment?

Since the company’s May IPO, shares of Beyond Meat have surged by more than 840 percent, according to Forbess contributor Olivier Garret.

But, with more and more plant-based-meat competitors entering the marketplace, the California-based company’s stock is bound to fall — hard.

Garret, who is also the CEO of investment advisement firm RiskHedge, uses LaCroix sparkling water as an example.

When LaCroix first hit the market, it was viewed as the next big thing and investors went mad for it, snapping up so many shares in its parent company National Beverage its value jumped 550 percent from May 2015 to September 2017.

But, other companies began offering alternatives, sparkling water found its level and National Beverage’s stock crashed by 31 percent in nine months.

“The exact same thing will happen to Beyond Meat,” Garret writes. “Some will call this an unfair comparison. They’ll argue Beyond Meat is more innovative than National Beverage. They’ll say it has a ‘first-mover advantage.’ It’s true that Beyond Meat introduced plant-based meat to the masses. But let’s not forget that plant-based meat is a basic consumer good. It’s a commodity that can be easily replicated. Commodities that can be easily replicated compete on price. That’s a big problem for Beyond Meat because its products are expensive … It can’t charge such sky-high prices for much longer.”

Beyond Meat already has competition in the Impossible Burger as well as plant-based meat products from Nestle and Tyson and the Morningstar brand.

In addition to those competitors, Hormel is unveiling a plant-based meat line called Happy Little Plants while Kellogg’s has plans for a product line named Incogmeato.

Shares of Hormel jumped Wednesday afternoon following the news.

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