Beyond Meat is public, opening at $46, far above the $25 IPO price, as investors bought into the company. The stock rose even further, more than doubling in value at $54.28, as investors rushed to buy.
That early pop was better than those in the initial public offerings of Lyft (ticker: LYFT), Pinterest (PINS), and Zoom Video Communications (ZM). Ideally, demand for the company’s meatless burgers will match demand for the stock.
On April 22, management indicated it would sell shares to the public for $19 to $21 a share. Investor demand appears likely to have exceeded expectations because the company raised the price range to $23 to $25 a share (BYND) on April 30. The $4 boost is a 20% increase from the midpoint of the original range.
Beyond Meat sold more stock, too. On April 22, the company said it planned to sell 8.8 million shares. The company ended up selling 9.6 million, 10% more.
Selling more stock at a higher price is great, but remember, the big gain accrues to the company and not investors. Beyond Meat raised $241 million in its initial public offering, about $65 million more than it originally expected. (That amount excludes brokers’ typical options to purchase additional stock to help balance demand.)
The company says it plans to use the cash to “invest in current and additional manufacturing facilities and expand our research and development and our sales and marketing capabilities.” That’s pretty standard for a high-growth company raising money in public markets.
The $25 price gave the company a valuation of about $1.5 billion, excluding the company’s stock options. That valuation was 17 times 2018 sales, which grew 170% in 2018, but the figures soared after trading in the stock began.
Shortly afternoon, the market capitalization was $3.3 billion, about 38 times 2018 sales.
Beyond Meat’s flagship product is the Beyond Burger, made from pea protein. Its goods are available at about 30,000 points of distribution in the U.S. and other countries.
Write to Al Root at email@example.com