Set to report earnings on Monday, Beyond Meat stock closed at $234.90. Shareholders enjoy a 9.4 multiple of the $25 IPO price from 5/2/2019. “Kudos” to the underwriters who completely dropped the ball on this offering. Lead Underwriters Goldman Sachs, Credit Suisse, and J.P. Morgan issued $67, $70, and $97 price targets respectively in May. A week later, Credit Suisse and J.P. Morgan increased the target to $125 and $120 respectively.
Underwriters Merrill Lynch and Jefferies initially set price target at $85 on 5/28 and raised it to $101 and $105 on June 7. Yet, the company received only $25.
With BYND trading at 234.90 just 13 weeks after the IPO, I can’t stop thinking about the complete MISS for the company which received only $25 per share.
Speculators continue to place bearish bets on Beyond Meat. The at-the-money put-call parity, which should be priced at $0 for most stocks, is currently at $31.95 credit for September 20th (as seen in the picture). This means that speculators are willing to pay $31.95 to give someone the right to buy BYND from them on September 20 for $235 as long as they will give the speculators the right to sell it at $235 as well (Synthetic long/short position).
If I could ask Ethan Brown, the CEO of Beyond Meat a question, I would ask him the reason the IPO was priced so low (10.63 cents-on-the-dollar it is trading for now). How did the underwriters completely miss the demand for your stock? Interesting times ahead of us. Especially when the 180-day lockup expires.