:max_bytes(150000):strip_icc()/GettyImages-2202351375-0d801100818c4ec69404c933eddb8657.jpg "Beyond Meat Stock Collapsed. Meme-Stock Traders Have Brought It Back to Life.")
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Key Takeaways
- A debt-swap deal left Beyond Meat’s stock for dead—before the meme-stock crowd moved in.
- The shares jumped Monday, the latest indication of some traders’ penchant for risk even as other pockets of Wall Street are growing more cautious.
Whatever the investor appetite for meat alternatives is, plenty have a hankering for risk. Shares of Beyond Meat (BYND) show it.
Retail investors are crowding into the name, bidding to revive the plant-based burger and sausage maker’s beaten-down stock as a meme. Trading volumes in its shares and options started to surge last week, and are now at multiples of their 30-day averages, according to Yahoo Finance. Beyond’s shares recently traded at just under $1, climbing more than 50% on Monday to reverse much of last week’s drop. (At their post-IPO highs, they changed hands above $200 apiece.)
Penchant for high-risk/high-return plays is back among retail inverstors even as others are turning cautious. A Deutsche Bank research report last week said that the “momentum-chasing trade” has grown less popular with some of its clients. But those who crowdsource and evangelize stocks have lately tapped the beleaguered company as their meme darling once more.
“Today’s reversal and high short-interest will put it back on meme traders’ radars,” said Tom Bruni, head of markets and retail investor insights at investing-focused social-media platform Stocktwits.
Why This Matters to INvestors
Concerns of stretched valuations and geopolitical uncertainty are driving some investors to pull back from riskier bets. But pockets of the retail set are still eager to jump into meme-stock action, showing that the appetite for risk isn’t gone yet.
Beyond was sent “to the moon” alongside Opendoor (OPEN), Krispy Kreme (DNUT) and GoPro (GPRO) during the summer’s meme stock revival. Another opportunity to send the shares flying came last week—just as the company seemed to have hit rock bottom.
The once-trendy company, struggling with falling demand for its food products, resorted to a debt-swap deal that could lead to the issuance of as many as 326 million shares of its common stock on top of its 76.1 million already outstanding, suggesting the possibility of massive dilution. That helped cut the stock by more than half, extending its year-to-date declines. That’s right around the time when a thread called “MAKE $BYND GREAT AGAIN” showed up on a Reddit forum called “shortsqueeze.”
While Wall Street has formalized the definition of blue-chip or deep-value stocks, meme stocks are harder to pin down. They tend to be companies with a low number of tradable shares, which make them susceptible to big swings, and high short-interest, an opportunity for retail to thumb their nose at the pros. Many, like Beyond, have consumer-friendly names that may resonate with everyday folks.
Beyond, however, may be lacking a ringmaster. Eric Jackson, who is to OpenDoor as Keith “Roaring Kitty” Gill was to GameStop (GME) and AMC (AMC), said he was being inundated with requests that he take a position in the stock.
“Is this some bot campaign?” he posted on social media over the weekend.
