Shares of Beyond Meat (NASDAQ: BYND), a fast-growing food company with a portfolio of plant-based meat substitutes, jumped nearly 12% during early Friday trading after reports that a competitor was coming up short.
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Friday's jump in stock price is merely the finishing touch on a wild week that saw Beyond Meat's stock drop significantly after a JPMorgan downgrade due to its expensive valuation, only to rebound the following trading day.
Friday, it was reported that Impossible Foods, the company that produces the Impossible Burger and is a major competitor in plant-based meat substitutes, is reportedly having troubles supplying the Impossible Burger to restaurant chains White Castle and Red Robin. The shortage comes at a time when Impossible Foods is working with Burger King to release the Impossible Whopper nationwide after a successful limited offering.
Beyond Meat's jump today should be taken with a grain of salt. While a competitor slipping up could be viewed as a positive development, it also means its competitor has ample demand for its products. The most important thing for Beyond Meat is to make sure it has moved past such shortages, which plagued its own business in 2017 and 2018 (the company has said its days of struggling to meet demand are over). However, this likely won't be the last struggle with supply and demand from plant-based meat companies, since the market could grow by 1,000% over the next decade to reach $140 billion, per Barclays analysts.
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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool owns shares of Red Robin Gourmet Burgers and has the following options: short June 2019 $40 calls on Red Robin Gourmet Burgers. The Motley Fool has a disclosure policy.