Beyond Meat experiences decline in stock price following unexpected financial loss and revenue decrease.

• The stock price of Beyond Meat decreased following the release of the company's fourth quarter financial report, which showed a larger loss and declining revenue than anticipated.
• Ethan Brown, CEO, stated that the company anticipates reducing its operating expenses growth significantly in 2022.
• Wall Street's expectations for the company's revenue in 2022 were not met.

The company reported a wider-than-expected loss and shrinking revenue for its fourth quarter, as it shifts its focus from slumping grocery sales to scaling its production for large fast-food launches.

KFC Beyond Fried Chicken launched on New Year's Day, while February saw an extended trial of McPlant burger, made with Beyond's beef substitute.

Although the company had a plan to reduce expenses and explore new business opportunities, its stock price dropped by 11% in extended trading due to a disappointing 2022 revenue outlook.

According to Refinitiv's survey of analysts, the company's three-month performance ended Dec. 31 exceeded Wall Street's expectations.

• Loss per share: $1.27 vs. 71 cents expected
• Revenue: $100.7 million vs. $101.4 million expected

The company's fourth-quarter net loss of $80.37 million, or $1.27 cents per share, was wider than its loss of $25.08 million, or 40 cents per share, a year earlier. Analysts surveyed by Refinitiv had forecasted a loss of 71 cents per share.

The decision to rely on co-manufacturing facilities instead of the company's own manufacturing plants resulted in higher production costs, as well as increased transportation and logistics expenses.

Given the long-term importance of the supported projects, CEO Ethan Brown stated that the allocation was the right decision during the conference call with analysts.

In a statement, Brown announced that the company aims to "significantly reduce" its operating expenses in 2022, which could lead to a return to profitability.

Brown stated that the investments made in the team, infrastructure, and capabilities across the U.S., EU, and China, as well as the extensive product scaling activities for key strategic partners, had a significant impact on operating expenses and gross margin during a fourth quarter and year that were already affected by lower than expected volumes.

In the quarter, net sales decreased by 1.2% to $100.7 million, missing the anticipated revenue of $101.4 million.

The decline in U.S. grocery sales, which amounted to 19.5% less than the previous year, was attributed to several factors, including softer demand, increased discounts, loss of market share, and five fewer shipping days. Despite experiencing significant growth in 2020, the company's largest revenue-generating division has struggled to maintain that pace.

Brown explained on the conference call with analysts that the slowing growth of the company was due to its focus on its restaurant business instead of creating new grocery products, which usually increase demand. Nevertheless, he stated that the return of in-store sampling, increased distribution, and new marketing strategies would help revive grocery sales.

The company's joint venture with is set to launch a meat-free jerky product, which will be expensive to produce and negatively impact first-quarter profits, according to CFO Phil Hardin.

In the quarter, U.S. food service sales increased by 34.7% to $20.63 million, while international sales for Beyond rose by 22.6% to $30.07 million in both grocery and food service markets outside of its home market.

Beyond has experienced losses and revenue disappointment for the second consecutive quarter, with factors such as the delta variant, distribution issues, and a $1.9 million write-off due to water damage at one of its plants affecting its third-quarter results.

Its fourth-quarter revenue is expected to fall within the range of $85 million to $110 million, as previously forecasted in November, due to the same operational challenges that will impact its results.

Beyond expects revenue of $560 million to $620 million in 2022, which is a 21% to 33% increase from the previous year. However, this outlook is slightly below the net sales forecast of $637.3 million by Wall Street. Additionally, Brown stated that the company anticipates higher costs in the first half of 2022, but will reduce hiring and other expenses.