Can Beyond Meat’s Meme-Stock Star Turn Last Beyond Last Week?

Last week, the meme-stock phenomenon roared back so strongly that you could practically smell the 2021 stimulus checks burning. 

A surge in Beyond Meat shares early in the week, which abated Thursday and Friday, reintroduced markets to the disruptive force of Reddit and social media-inspired retail traders whose frenetic activity once helped destabilize multiple hedge funds.

Blast from Reddit Past

The meme-stock phenomenon, born during the pandemic, refers to hordes of investors coordinating on social media sites like Reddit to buy shares in specific companies, typically struggling ones. Not because they think they’re poised for a turnaround, but because by creating a maelstrom of sudden demand, they can drive up share prices. Short-sellers are then forced to buy back shares to cover their positions, which sends prices even higher. Of course, things can crash just as quickly because there’s no innate business value driving the demand. GameStop and AMC were the most famous examples of meme stocks in their 2021 heyday, and the London-based hedge fund White Square Capital famously had to shut down after incurring losses from bets against GameStop. New York City hedge fund Melvin Capital, which also suffered heavy losses from bets against GameStop, closed in 2022 after it was hit by that year’s market slump.

Another stock targeted back then was Beyond Meat, which made a glorious, and then unglorious, return to meme-stock status last week. Its shares fell to record lows earlier this month, little more than 50 cents, after the struggling company said its creditors agreed to a debt swap that would substantially dilute existing shareholders. Meme-stock traders saw an opportunity and piled in, pushing the company to a peak gain of 1,300% during Wednesday trading. But the frenzy was as short-lived as it was seismic:

• Citigroup analysts said that retail investors accounted for 16% of single-stock trading volume on Tuesday, the highest on record since 2018.
• But Beyond Meat shares were up only 267% over the previous five days as of Friday’s close, having given up almost all of their peak gains. 

History Lesson: Beyond Meat reported a 20% year-over-year revenue decline in its latest quarter, so this was not a fundamentals-driven rally. In fact, even with its meme pops, the stock is down so far this year. Before that, they fell for four straight years: by 47% in 2021, 81% in 2022, 27% in 2023, and 57% in 2024.