Short selling data can help active investors avoid large losses. Short sellers tend to be well-researched, high-conviction traders. If they’re shorting a stock, there’s usually a good reason they are doing so.
In this report, we are going to look at the short selling data on Beyond Meat Inc (BYND:US). Beyond Meat is an American food company that specializes in plant-based meats. The company has partnerships with a number of fast-food chains including TGI Fridays, BurgerFi, and Del Taco and also sells its products through retail channels. It is listed on the NASDAQ Global Select Market and currently has a market capitalization of $5.4 billion.
Beyond Meat Inc: Short Selling Data
Looking at the short selling data on Beyond Meat, we see several red flags.
The first is that short interest is very high. At present, around 22 million BYND shares are on loan, which equates to short interest of around 37%. This indicates that many institutions are bearish on BYND.
The second is that short interest has risen substantially in recent months. Three months ago, around 14.4 million shares were on loan. Since then, the number of shares on loan has risen approximately 46%. This tells us that short sellers have been ramping up their short bets.
The third red flag is that utilization has increased to a high level recently. Three months ago, utilization was 78%. Today, it’s 94.34%. This tells us that demand for stock on the short side has increased significantly in recent months.
Poor Q3 Results
Beyond Meat recently posted a very poor set of Q3 results that sent its share price down.
For the third quarter, the plant-based meat company posted revenue of $106.4 million, which was below analysts’ forecast of $109.2 million. Meanwhile, it posted an adjusted loss for the quarter came of 87 cents per share, which was far higher than the consensus forecast of 39 cents per share.
What really disappointed the market was the guidance. Here, BYND advised that it is expecting net revenue of $85 million to $110 million for the fourth quarter. Analysts had been expecting $132 million. The company blamed Covid-19 uncertainty, labor availability, and supply chain disruptions for the disappointing performance.
Since these results, the stock has had its price target cut by a number of brokers. One broker that reduced its price target was Credit Suisse, which cut its target from $70 to $65.
“We view the results as further evidence that Beyond’s business is reaching market saturation faster than expected and that the company has deeper problems that won’t be easy to fix,” wrote Credit Suisse analyst Robert Moskow.
In light of these poor results – which one analyst described as ‘disastrous’ – we see the high short interest here as a bearish indicator. With short sellers ramping up their short bets on BYND, we think caution is warranted towards the stock.