Beyond Meat Financial Analysis

After analyzing Beyond Meat's financials, it's clear that this company is at risk of going bankrupt. Revenues are declining and Beyond Meat has struggled to maintain a positive gross margin. It's also burning through a lot of cash and the only reason it hasn't gone bankrupt already is that investors and other organizations keep giving it money. But before I dive into the financial analysis, here's some backstory on the company. Beyond Meat was founded by Ethan Brown in 2009. Brown grew up on a farm in Maryland and after college he worked in the renewable energy space. He then got an MBA from Columbia University and started Beyond Meat. Beyond Meat makes plant-based products that replicate the taste and appearance of meat. Like other plant-based meat substitutes, Beyond Meat's products are better in terms of the environment, natural resource usage, our health, and animals. However, Beyond Meat did not set out to make products for vegetarians. The company's initial registration statement, filed back when Beyond Meat went public, said that Beyond Meat was targeting customers who wanted to reduce their meat consumption but aren't necessarily vegetarian. According to the company, 93% of consumers who bought the Beyond Burger also put animal meat in their shopping cart. This is why Beyond Meat requested that grocery stores stock its products in the meat section. The company said it never intended to make the best veggie burger because vegetarians make up less than 5% of the population. Ethan Brown didn't want Beyond Meat to be a niche player. He wanted to disrupt the meat industry. He pointed to the success of non-dairy milk, which grew to be 13% of the size of the milk industry, whereas plant-based meat was just 2% of the size of the meat industry. Brown said it all came down to taste as consumers associate veggie products with inferior quality. If Beyond Meat was going to succeed, it couldn't be seen as just another veggie burger. So did positioning Beyond Meat's products this way work? Well, initially, the demand far exceeded the supply. The first large customer was Whole Foods, which carried Beyond Meat's products in its Rocky Mountain division. Strong sales led Whole Foods to carry Beyond Meat's products in all its stores. Then Safeway began selling Beyond Meat, followed by Kroger. In the summer of 2018, the Beyond Burger actually out sold all of the beef burger patties at Ralphs. When Beyond Meat was offered at the second largest fast food chain in Canada, demand blew away the forecast and resulted in shortages. We can see this growth in Beyond Meat's top-line revenue. Sales doubled in 2017 and then tripled in 2019 before peaking at $464 million in 2021. Most of that revenue came from sales to grocery stores like Kroger. But Beyond Meat also sold products to restaurants, food distributors, and institutions like hospitals and universities. But revenue declined in 2022 as sales decreased across both of these channels and things have only gotten worse from there. Top-line revenue decreased by 18% in 2023 and by 15% in 2025. Not to be fair, this problem was not specific to Beyond Meat. Demand for plant-based products in general began decreasing around this same time. In its conference call for the fourth quarter of 2025, Beyond Meat's management attributed the weaker demand to misinformation that is causing consumers to think its products are unhealthy. The company also mentioned negative political headwinds with the US government promoting the consumption of red meat. But there's a slight problem with that argument. Beyond Meat's sales haven't just declined in the US, they've also declined internationally. While the US is Beyond Meat's largest market, its international sales aren't trivial. In Beyond Meat's best year for sales, 2021, 1/3 of its sales came from outside the US. Clearly, the demand for plant-based meat substitutes has decreased globally. But why? Some people say that plant-based meat was just a fad and it's lost its popularity. Others say that the demand for plant-based meat is still there. It's just that the products are too expensive. High inflation meant that customers weren't willing to buy fake meat when they could purchase real meat for less money. Whatever the reason, Beyond Meat's sales have declined for 4 years in a row and the trend is not looking good. No company wants to see sales decrease, but this is especially troubling for Beyond Meat because the company needs to sell

at a high volume to be profitable. Beyond Meat has struggled with its gross margin for years. The gross margin was -39% in 2016, which means the company was losing money on each sale. But as sales increased, the company's gross margin became positive, peaking at 33. 5% in 2019. Higher sales meant higher production, which allowed Beyond Meat to spread its fixed manufacturing costs over a greater number of units and to purchase raw materials in higher volumes, achieving a lower cost per unit. Unfortunately, Beyond Meat's gross margin turned negative again in 2022, the same year that its sales began to decline. So why is having a low gross margin such a problem? Well, after paying for its inventory, Beyond Meat barely has any money left for R& D, advertising, or the salaries of its corporate staff. Consequently, Beyond Meat has been forced to slash its advertising budget and R& D spending, neither of which is going to be good for sales. Advertising went from being 5% of sales to just 2. 2% of sales, whereas R& D went from being nearly 15% of sales to just 8. 4% of sales. But that cost-cutting is not going to be enough. Beyond Meat's gross margin was just 2. 8% in 2025 and that's just not high enough to be profitable. Even when Beyond Meat had a gross margin percentage of 33. 5% back in 2019, the company still lost money. Given all this, you might be wondering how Beyond Meat is still in business, which brings us to cash flow. Between its negative operating cash flow and CapEx, Beyond Meat burned through more than 800 million of cash during 2021 and 2022. Even with these cost cuts, Beyond Meat is burning through 100 million of cash annually from its core business operations. The company isn't even close to generating positive operating cash flow. Its current ratio has been declining and based on my calculation of the company's Altman Z-score, the probability of bankruptcy is 99. 999%. So how long can Beyond Meat keep going? It all comes down to cash. Beyond Meat reported 200 million of cash on its balance sheet at the end of 2025. If the company continues burning through 100 million of cash a year, that gives Beyond Meat 2 more years unless it can arrange additional financing. The situation could have been even worse but for a couple of things. First, Beyond Meat effectively borrowed money from a nonprofit. An affiliate of the Ahimsa Foundation, which promotes plant-based diets, lent 100 million to Beyond Meat during 2025. Also, Beyond Meat managed to restructure its debt. Back in 2021, the company had issued 1. 15 billion of convertible bonds. The good news was that those bonds had a 0% interest rate. The bad news was that those bonds were set to mature in 2027, which means that Beyond Meat needed to come up with more than a billion dollars. In 2025, management was able to convince its creditors to exchange their 1. 15 billion of bonds for new bonds with a principal of just 209 million that don't mature until 2030. This gives Beyond Meat a 3-year extension on repaying the debt and it has to pay 900 million less. Why did the creditors agree to take such a big haircut on these bonds? Beyond Meat gave them a higher interest rate plus 316 million shares of stock. Because Beyond Meat exchanged the old bonds for new bonds with a much lower principal, Beyond Meat recorded a $548 million gain on the debt restructuring. That gain caused Beyond Meat to actually report a profit. But don't let that confuse you. Remember, that's just a one-time gain for accounting purposes. Beyond Meat lost money yet again if you ignore that gain. Now, Beyond Meat definitely bought itself more time with that debt restructuring. But what's the plan going forward? Well, management plans to grow top-line revenue by introducing new products. But these new products aren't fake meat. Beyond Meat is repositioning itself as Beyond the Plant Protein Company or just Beyond. And its first new product is a sparkling protein drink called Beyond Meat's. Beyond Meat also plans to launch a protein bar. The company is launching new products cuz it ultimately has a revenue problem, not a cost problem. You can only cut costs so much and the company's already done that. It needs to grow top-line revenue. But the question is whether the sales boost from these new products will be sufficient to make the operating cash flow positive.

The market for protein drinks and protein bars is pretty crowded. And increasing sales will be even harder given that Beyond Meat's board made the decision to exit China in 2025. Things look pretty bleak, but we're not done. One thing we haven't discussed is that there've been some accounting issues. Beyond Meat delayed the release of its 10K in 2026 because of material weaknesses in its internal controls. One of the weaknesses pertains to the valuation of inventory, particularly the provision for excess and obsolete inventory. This suggests the inventory balance could be overstated, which would mean expenses have been understated. In other words, Beyond Meat's losses could be even worse. The good news is that an inventory write-down is a non-cash charge. So, if such a write-down is required at a later point in time, this won't affect cash flow. But this is still concerning because it has to do with accounting quality. To what extent can you trust the numbers the company's reporting? You always feel a lot better if the internal controls are working properly. So, will Beyond Meat be able to overcome these obstacles and avoid bankruptcy? That depends on whether the company's new products will have a significant effect on sales, whether the demand for plant-based meat will recover, and whether the company can continue to obtain financing to bridge the gap until its cash flow from operating activities becomes positive. Assuming Beyond Meat continues to burn through 100 million of cash annually, the company's going to need additional financing, whether from borrowing or from investors, in the next couple of years. And if Beyond Meat can't raise additional financing and it runs out of cash, that means bankruptcy.