Beyond Meat (BYND) shares extended gains Friday as the plant-based food maker continues to benefit from the tailwind of retail investors in the meme-stock universe and the stamp of approval from TheStreet's founder, Jim Cramer.
Cramer urged retail investors, an the r/wallstreetbets community in particular, to adopt Beyond Meat as their next short-squeeze target amid a resurgence of influence from the Reddit-based chatroom on other so-called meme stocks such as AMC Entertainment (AMC) and GameStop (GME).
AMC, in fact, surged 35.6% yesterday -- with 600 million shares in volume against an outstanding float of just 500 million -- and accounted for around 11% of total NYSE volume as Cramer praised CEO Adam Aron's 'great work' with the movie theatre chain and its pending slate of blockbuster films that should power ticket sales as pandemic restrictions are lifted in states around the country.
Beyond meat, Cramer argues, fits perfectly into the r/wallstreetbets investment thesis: it's run by a talented CEO in Ethan Brown, it's poised for expansion based on recent product deals with the likes of McDonald's and Yum! Brands and short interest in the stock remains elevated at 25.2% of the outstanding float.
That said, it's business model is also best with challenges, particularly with respect to margin pressures brought by its plans for partner-lead expansion.
"While we admire the company’s competitive advantages in the fast-growing meat alternatives category, we maintain a neutral stance on the stock because the blue and grey sky scenarios are so far apart and hinge so heavily on highly opaque decision making by Beyond’s large quick-serve restaurant customer “partners”, said Credit Suisse analyst Robert Moscow.
"Beyond’s EBITDA margin has fallen to -10% because management is aggressively investing in capacity and infrastructure under the assumption that big customers like McDonald’s and Yum will decide to commercialize plant-based products on their menus on a global scale," he added. "However, these customers have not committed to any quantitative volume targets yet and the test results have been mixed."
Beyond Meat shares were marked 2.2% higher in early trading Friday to change hands at $145.70, the highest since March 15 and move that would extend the stock's two-week gain to around 42%.
AMC shares, meanwhile, surged another 15% in early trading to $30.66 each while GameStop was down 5.5% at $243.00 each.
Short interest in GameStop is also, however, with recent data from S3 Partners showing bets against the group amounting to around $2.22 billion, or 22.8% of the shares outstanding. Short positions held since the start of the year, S3 noted, would have theoretically suffered nearly $6 billion in mark-to-market losses.
AMC short interest, S3 notes, is around $1.06 billion, or 20.28% of the outstanding float.
