Throughout this novel coronavirus pandemic, I have consistently warned against plant-based meat producer Beyond Meat (NASDAQ:BYND). Despite its many blips and dips, investors should still remain wary about the company. Along with being a fad, consumers will eventually wise up to the many chemicals necessary to produce fake meat. Thus, I still can’t recommend Beyond Meat stock.
Events over the past several weeks further embolden my cautionary take. As you’re well aware, many on Main Street are worried about the economy despite soaring valuations on Wall Street. Under this context, you’d expect people to focus on issues such as unemployment benefits and the jobs market.
Instead, their top priority is the overall health of the nation. If so, this doesn’t favor Beyond Meat stock.
According to a USAToday.com report, Americans are indeed concerned about the economy. However, this sentiment is colored somewhat by political views. But there’s no such filter when it comes to physical health, which Americans perceive as a greater risk to the pandemic than mental health or financial well-being.
By deduction, I find it difficult to believe that at least a large segment of the population doesn’t have reservations about fake meat. Admittedly, this market has been around for a long time. But most people prefer the real thing. Therefore, it’s a big ask for consumers to make the switch from something with which they’re familiar to an unknown.
Keep in mind that we’re not talking about switching from one smartphone provider to another. This is something that we put into our bodies.
Now, amplify that reservation with what parents will feed their children. From this perspective, Beyond Meat stock has gotten ahead of itself.
Beyond Meat Stock May Run Into an ‘Information War’
Several analysts have pointed out that a substantive economic recovery won’t occur until there is a vaccine. With the Trump administration funding the acceleration of the biotechnology arms race, companies like Moderna (NASDAQ:MRNA) and Novavax (NASDAQ:NVAX) have soared in recent months.
However, just because a vaccine exists doesn’t necessarily mean that people will take it. Interestingly, Sciencemag.org notes that only half of Americans plan to get a Covid-19 vaccine. Sciencemag.com contributor Warren Cornwall writes:
“Even before the pandemic, public health agencies around the world were struggling to counter increasingly sophisticated efforts to turn people against vaccines. With vaccination rates against measles and other infectious diseases falling in some locations, the World Health Organization (WHO) in 2019 listed ‘“vaccine hesitancy’ as one of 10 major global health threats.”
The reason for this hesitancy? A well-crafted propaganda machine that has cast doubt in people’s minds about their effectiveness and safety. It’s this kind of information war that could eventually plague Beyond Meat stock.
With vaccines, fear cuts both ways. Yes, you can believe in a conspiracy theory that “they” are out to get you. But if you’re willing to believe that you’re likely to have some seed of doubt. For instance, what if the vaccine really does work? Wouldn’t you be putting yourself in danger then?
Well, fake meat doesn’t have that margin. All it takes is for some doubt to creep into your mind. When it does, you can make a simple choice: don’t buy.
Further, there’s no stigmatization associated with not wanting to eat plant-based meat. If you tell curious passersby that you’re worried about the chemicals, no one will bat an eyelash. Thus, Beyond Meat stock is a couple bad reviews away from incurring volatility.
Commoditization Can Take a Bite out of Beyond
Another point that gets lost in the discussion regarding plant-based meat is that this is a subjective market. Admittedly, many people swear by Beyond Meat. Others have a less-than-favorable opinion.
But the point is that because this segment is so subjective, it’s difficult to corner the market. As well, it opens the door to competition. Other companies can experiment with recipes that may appeal to those who don’t like the Beyond Meat brand.
Moreover, large food companies are moving into this space. As the number of competitors rise, the core product will become commoditized. Especially once this pandemic fades away, a good-sized incentive to buy Beyond Meat stock will likewise recede. Ultimately, investors should take a pass and save their capital for a genuinely lucrative opportunity.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now. As of this writing, Matt did not hold a position in any of the aforementioned securities.