Beyond Meat, a company that creates plant-based meat alternatives, has filed for a $100 million initial public offering (IPO). The California-based company, founded in 2009, previously received funding from Bill Gates, Twitter co-founder Biz Stone, Tyson Foods, and venture capital firm Kleiner Perkins Caufield & Byers.
Beyond Meat will be the first publicly-traded company solely focused on the production of vegan and vegetarian meat alternatives.
The IPO will test investor demand for stocks in what’s expected to be a multibillion-dollar industry in the next decade. Plant-based foods are growing more popular as consumer awareness about the health risks associated with meat-based diets increases, and as awareness about environmental damage linked to industrial meat production also rises.
Meet Beyond Meat, and its market
Beyond Meat’s products, mostly made from pea protein, include vegan sausage and chicken, and the Beyond Burger, a veggie burger that’s currently sold in some grocery stores and restaurants.
It’s one of a small but growing list of meat substitute companies, which includes Impossible Foods (maker of the Impossible Burger) and Morningstar Farms.
The global market for vegan and vegetarian meat alternatives is growing, and as of 2017, was valued at roughly $4.2 billion, according to industry data. By 2025, its expected to grow to more than $7.5 billion.
Still, the vast majority of Americans eat meat. According to a recent Gallup poll, 5% of Americans identify as vegetarians, and 3% are vegans. That led to $3.1 billion in sales of plant-based foods to U.S. consumers in 2017, an 8.1% increase over 2016.
What makes this IPO so special?
Beyond Meat’s IPO is a bit unusual, for a few key reasons.
- It’s small. The company has revenue of less than $60 million. That said, it’s products are distributed in about 11,000 grocery stores and an equal number of restaurants and other foodservice providers across the U.S.
- The company isn’t profitable…yet. Beyond Meat loses money every year. It reported a net loss of $30.4 million on net revenue of $32.6 million in 2017. However, net revenues are up 167% to $56.4 million compared to net losses of $22.4 million through the first nine months of 2018.
- The company faces existential risks. In its SEC filing, the company lays out some of the risks associated with its business, including the fact that it has yet to achieve profitability. It also points to possible expansion and supplier issues (pea protein shortages, for example) as problems that could kneecap its growth.
The Beyond Meat IPO is similar to IPOs in the cannabis industry. Both industries are new, and potentially cater to investors interested in alternative businesses.
Keep up with other IPOs, and learn about investing in small, emerging businesses by reading the Stash newsletter.