Emerging meme stock Beyond Meat has dropped from its Wednesday high in its first test after skyrocketing more than 1,000%. Investors are attempting to turn the stock into a buzzy trend akin to 2021’s GameStop mania, but for some, its daily decline has started to cast doubt on the movement.
BYND hit a local high of $7.69 on Wednesday, as social media traders helped pump the stock more than 1,435% over six days. However, according to TradingView, it fell 53.45% from that high to $3.58 by Wednesday’s market close.
It has since continued its decline, dropping to a recent price of $2.91, marking a roughly 19% drop on the day. That’s still a monstrous gain of nearly 500% over the last week, but it’s a potential sign that momentum is slowing.
Even so, during the GameStop phenomenon of early 2021, the meme stock had its own stumbles before its most explosive gains. After soaring 737% from $4.75 to $39.80 over two weeks in January 2021, GME fell 50% in a single day to $19.20. It then surged another 529% to $120 in the next three days, according to TradingView.
“I think, in my opinion, what happened yesterday was just mass hysteria,” Beyond Meat influencer Dimitri Semenikhin, better known as Capybara Stocks, told Decrypt.
GameStop had Keith “Roaring Kitty” Gill, and now Beyond Meat investors are looking to Semenikhin for his projections—and he remains bullish on BYND, even amid volatility.
“If it were a full-on collapse and there was something fundamentally wrong, this stock would be trading at $1.50, which it was on Tuesday,” Semenikhin said. “The fact that it is stabilizing is a good thing for Beyond Meat and investors there in general.”
“The main question as to whether it will rise short-term or not is the guidance that they will publish during earnings,” he added, referring to the upcoming report on November 5.
Beyond Meat is a plant-based food company that is used by many major fast food chains, such as McDonald’s, KFC, and Pizza Hut. Michael Lebowitz, a portfolio manager at RIA Advisors, told Decrypt the company had been struggling financially, resulting in a poorly performing stock.
“Beyond Meat was basically on the verge of bankruptcy. The company did a debt swap, so it alleviated some of their debt. But in exchange, they heavily diluted their equity,” Lebowitz said, noting that the move resulted in the stock dropping to a price of just $0.50.
“[At] $0.50, it’s probably a ‘dead man walking’ company, and the product sales have been going down. They’ve never made a profit since becoming a public company… it wasn’t looking good.”
What BYND did have going for it, he added, was incredibly high levels of short interest—with many traders labeling it as the market’s “most shorted” stock. This is what attracted meme stock fans, who notoriously have an aversion to short sellers suppressing the price of a stock.
Short sellers borrow shares, sell them, and then buy them back at a lower price before returning the stock to the lender. Their goal is to bet that an asset’s price will decrease so they can make a profit.
Lebowitz explained that meme stock traders are looking to “take advantage” of these short sellers. By pumping the stock’s price, it will force those with short positions to buy back the stock to prevent catastrophic losses, thus boosting the price even further. This kind of “short squeeze” was also a major catalyst in GameStop’s 2021 price jump.
“It has to do with a kind of rebel movement—an underdog story that people typically view short sellers as those rich, old, fat billionaires that sit somewhere and kind of look down upon them. And then that is finally their time to win against them in a fight,” Semenikhin explained. “I think with Robinhood now, probably a lot of the open shorts are actually retail.”
“But also, I think that everyone has seen what happened with GameStop,” he added. “Every one of those people has watched the movie, everyone knows about it and those historic gains, and everyone is trying to chase them.”
Ultimately, however, portfolio manager Lebowitz believes this is all just a fad and Beyond Meat will eventually return to where it came from.
“I think it’s just a meme stock scam. I’m not an expert on Beyond Meat, but most likely it’ll be back down to $0.50 to $1, somewhere down there relatively soon,” Lebowitz told Decrypt.
By “scam,” he explained, Lebowitz is referring to BYND’s price being inflated due to social media buzz that he feels is misleading when compared to the fundamentals.
“They’re promoting something that has no value behind it,” he finished.
