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Why Beyond Meat Stock Jumped 6% on Tuesday

What happened

Beyond Meat (NASDAQ: BYND) shareholders beat a falling market on Tuesday. The plant-based meat product company's stock jumped 6% by noon ET compared with a 2% slump in the S&P 500. The surge only erased a small portion of recent losses, and shares remain down by over 55% so far in 2022.

The rally might reflect a judgment by some investors that these declines have created a more compelling value as Beyond Meat works to turn around its struggling business.

So what

There have been some good reasons for the stock to fall in recent months. Beyond Meat's last few quarterly reports contained signs of weakening consumer demand for its plant-based products compared with earlier phases of the pandemic. Losses reached 92% of sales in the period that ended in early April, too.

But the business might be about to post a turnaround. Beyond Meat is introducing many new products at retailers and through its restaurant partnerships, including a burger patty item aimed at capitalizing on the summer grilling season.

Management is spending aggressively on marketing and promotions, too, which have traditionally been useful ways to boost sales.

Beyond Meat's stock could jump, as it did on Tuesday, if these initiatives help the chain return to solid sales growth and rising profitability.

Now what

Investors might hear some good news on July 12, when PepsiCo, a key retailing partner, issues its second-quarter operating update. After that, look for Beyond Meat to announce its own earnings results in early August.

Investors will be watching that report for evidence that Beyond Meat has improved its sales volumes by introducing more innovative products, without sacrificing much in the way of gross profit margin.

If revenue and profitability disappoint shareholders again, on the other hand, the stock might easily give back any gains investors have seen leading up to that announcement.

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Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Beyond Meat, Inc. The Motley Fool has a disclosure policy.


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