Beyond Meat Incâ€™s (BYND) stock price has increased by 244% since its May IPO and short sellers, most of whom entered their trades after BYNDâ€™s initial pop to $70, are down 20%. Short sellers had been very active immediately after BYNDâ€™s IPO but recently been relatively quiet with shares shorted increasing by only 838 thousand shares, +$67 million, over the last week.
BYND short sellerâ€™s losses coupled with stock borrow rates, which have shot up to 65% fee, have made the trade less attractive. Existing short sellers are not increasing their exposure appreciably and new short sellers are either unable to get locates or realize that their net Alpha after financing costs is not making the trade an investable proposition at this time.
BYND short interest is the 14th largest in the Food Products sector, but due to lack of stock loan availability its quick rise up the league tables has hit a speed bump. With much of its stock held by internal holders or in non-lending retail hands coupled with a relatively small float there is little hope of a significant amount of stock landing in lending programs until its 180 day lockups expire on October 29th.
While BYNDâ€™s $467 million short interest does not compare with Appleâ€™s or Teslaâ€™s, it does have the 11th largest short interest as a percentage of float amongst U.S. equities.
In addition to short sellers hampered by lack of stock loan availability and high stock borrow rates, BYNDâ€™s stock price may be in for another bump if the possibility of a McDonaldâ€™s (MCD) partnership comes to fruition. BYNDâ€™s main competitor, Impossible Foods Inc, has partnered with Burger King to create the â€śImpossible Whopperâ€ť which may be rolled out soon, after a successful trial launch in the St. Louis area. A BYND partnership with MCD would send its stock price soaring and short sellers incurring further losses. BYND shorts are already down -$72.1 million, -19.89%, in mark-to-market losses and a move to $100/share would add over $119 million of additional mark-to market losses to existing short sellers.
Analysts have a wide spectrum of price targets for BYND, with JP Morgan at $97, Jefferies at $85 and Goldman Sachs at $67. If BYNDâ€™s stock price moves to the upper end of the range, we would expect a short squeeze in the stock as the increased mark-to-market losses coupled with high stock borrow rates would be a one-two punch most short sellers would find hard to stomach.
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Managing Director Predictive Analytics, S3 Partners, LLC
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