Shares of Beyond Meat Inc fell nearly 13% on Friday after it narrowly failed to make a profit in the fourth quarter despite tripling sales, eating into expectations among investors for the high-flying faux meat maker.
Beyond Meat, which surged nearly ten-fold in value in the months after its stock market last May, has since partnered with numerous retail chains and restaurants, including McDonald's, helping the company more than triple its revenue in 2019.
But with rival plant-based meat producers - from Impossible Foods, to Kellogg Co's Morningstar Farms, or Nestlé SA's Sweet Earth - vying for shelf space at retailers and deals with food service outlets, analysts say the company is at risk of losing its first mover advantage.
Thursday's quarterly report showed a 1 cent per share loss for the quarter, versus analyst expectations of a 1 cent profit due to higher restructuring and some administrative costs.
From a peak of just under $240 last July, shares in the company have now fallen back below $100 and still look expensive on a traditional valuation basis, at 222.21 times expected earnings.
"Pricey valuation, increasing competition, and the potential for new selling pressures following the expiration of the lock-up suggest more muted upside potential from here," Oppenheimer analyst Rupesh Parikh said.
He and a number of other Wall Street analysts who have backed the company through last year's hype, underlined that the results were still strong, showing it within a whisker of generating a profit at a time when it is investing aggressively in production and launches globally.
Piper Sandler analyst Michael Lavery argued that Beyond Meat is growing rapidly and its product portfolio aligns with consumer trends.
Another, Jefferies' Rob Dickerson, argued management's focus now on aggressive growth was right, even if it came at the expense of near-term profit and margins.
"Given competition is ramping quickly, we agree with the strategy, especially if management wants to hold its first mover advantage," he said.
"We simply find (the) valuation too rich to step in at this price, given competitive uncertainty and potential capital needs over the next three years."
Dickerson cut his price target on the stock by $23 to $107, closer to the current median of analysts at $111.38.