Shares of Beyond Meat slumped 28% and were on track to open below their initial public offering price for the first time on Thursday as investors fretted over the vegan meat maker's rising costs to battle increased competition.
Cash used for operations in the first quarter surged to $165 million from about $31 million a year ago, as the plant-based meat pioneer diversified its product range and offered steeper discounts to protect its market share.
"Beyond Meat's cost structure may be out of whack, and cash may run out by the end of next year," J.P. Morgan's Ken Goldman said.
"We worry that management's outlook is a bit out of balance with current realities."
On Wednesday, Ethan Brown, chief executive officer sought to address the concerns.
"I wouldn't take this quarter's cash consumption and then just kind of play it out and assume that we're out of cash based on that," he said, adding the company was taking "several measures" to reduce expenses.
Beyond Meat's shares were trading at $18.80 before the bell on Thursday, much lower than its 2019 IPO price of $25.
Its market value has plummeted to $1.66 billion from a peak of about $14 billion.
At least five brokerages cut their price targets on the stock on Thursday, with some raising concerns over the company's path to profitability, especially as they anticipate cost pressures to remain due to surging inflation.
"Plant-based meat is not a fad, Beyond Meat's mission is noble, ... however, we remain of the view a profit inflection may be several quarters out, if not years," Cowen analysts said.