Beyond Meat Inc (BYND) reported mixed 2nd Quarter results with earnings of -$0.24/share, missing expectations, but Sales of $67.3 million beating expectations. The biggest news on the call was the announcement of a secondary offering of 3 million shares from existing investors and 250 thousand shares from the company. BYND investors will be able to cash in on the companyâ€™s nearly fourfold rise in its stock price ahead of their November lockup period expiration and Beyond Meat Inc. will be able to raise cash for operational purposes.
BYND short interest is $1.16 billion; 5.21 million shares shorted; 44.45% of its float; 138% borrow fee on existing shorts and new stock borrows are going between 160% to 240% fee.
BYND short selling has been hampered by lack of stock borrow supply since the end of May. While short selling has increased slightly since the beginning of June, an increase of 55 thousand shares +1.07%, we have seen 179 thousand shares covered, -3.33%, over the last week. Most of the short selling has been forced due to a slew of stock loan recalls hitting the street over the last two weeks, but there has also been voluntary short covering due to the high cost of borrow eating into traderâ€™s alpha and the nearly $1 billion of mark-to-market losses incurred by short sellers since BYNDâ€™s IPO.
BYND short sellers were down $970 million in mark-to-market losses since its IPO, and down $441 million in July. BYNDâ€™s stock price was down significantly in after-market trading after the secondary offering news and the price weakness carried through to todayâ€™s market open. BYND is down -14.5% in early morning trading and shorts have recouped $167 million in mark-to-market profits in less than 15 minutes of trading. Shorts are now down â€śonlyâ€ť -$803 million in mark-to-market year-to-date losses and down -$185 million in month-to-date losses.
A BYND short squeeze is still looming on the horizon, shorts are paying over $4.4 million in daily stock borrow financing costs; stock borrow rates continue getting more expensive; stock loan recalls keep hitting the streets; there is virtually no stock borrow supply left on the street to cover those recalls; and shorts are still down a significant amount of mark-to-market losses even with todayâ€™s price drop.
BYND is still a Tesla-like lifestyle based long stock holding and therefore we are less likely to see long shareholder capitulation on price pullbacks which would shift BYNDâ€™s price momentum downward. A rebound rally back to its yearly highs will probably shake out some more short sellers who caught a temporary respite from seemingly daily losses and provide some buy-side pressure. If BYNDâ€™s stock price rebounds it will force some short covering as shorts realize some of todayâ€™s profits before they disappear into thin air. If long shareholders decide to buy on the dip and build their positions at todayâ€™s â€ścheapâ€ť prices, short sellers may decide to cut their losses and buy back shares now and possibly wait until the 3.25 million share secondary offering hits the tape to re-establish their positions.
There are many reasons for an impending BYND short squeeze, but only a complete 180 degree change in long shareholder sentiment will save BYND short sellersâ€™ year-to-date P\L. If todayâ€™s price weakness doesnâ€™t hold, look for long buying coupled with short covering driving BYNDâ€™s stock price back to its recent lofty heights.
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Managing Director Predictive Analytics, S3 Partners, LLC
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