While US meat plants struggle to operate amid the COVID-19 outbreak, Beyond Meat has witnessed its biggest weekly percentage gain since last year.
Last week, Beyond Meat recorded a 12 percent hike in Friday trading even as other businesses are facing massive losses amid the coronavirus pandemic.
In fact, the company clocked its biggest weekly percentage gain since arriving on the stock market scene in 2019.
According to LA Times, Donald McLee, an analyst at Berenberg Capital Markets, said the spike is more likely a result of the combination of the looming meat shortage in the market and Beyond Meat’s partnership with Starbucks to launch its vegan meat products to 4,200 locations in China.
“On top of them expanding internationally ahead of expectations, there’s also this window for them to capitalize on a shortfall of traditional meat,” said McLee.
“That’s why I think you’ve been seeing the stock trade up a lot more.”
Meat plant closures
A number of slaughterhouses in the US downed their shutters in April after their workers tested positive for coronavirus.
Meat company Smithfield in Sioux Falls, South Dakota had to shut down when 644 workers tested positive for COVID-19.
Around the same time, Iowa’s county health department reported that 182 of the county’s 374 confirmed cases of the coronavirus had been traced back to Tyson Foods, leading one of the biggest meat producers in the U.S to shut its pork processing plant in Waterloo, Iowa.
According to Daily Mail, more than 11 meat companies including producers Cargill, National Beef Packing Co, and Empire Kosher Poultry Inc. have either closed facilities or reduced production in North America in wake of the coronavirus spread and employee wellbeing.
However, meat industry lobbyists warned the closures would lead to nationwide disruption in meat supplies later in the year.
“The closure of this facility, combined with a growing list of other protein plants that have shuttered across our industry, is pushing our country perilously close to the edge in terms of our meat supply,” said Smithfield CEO Kenneth Sullivan in a statement.
“It is impossible to keep our grocery stores stocked if our plants are not running. These facility closures will also have severe, perhaps disastrous, repercussions for many in the supply chain.”
Plant-based market growth
However, this shortage in meat supply has presented a great opportunity for Beyond Meat to expand its customer base, says Rupesh Parikh, a senior analyst at Oppenheimer & Co. who tracks food, grocery and consumer products.
According to InvestorPlace, “The company could benefit from consumers that are still looking to enjoy burgers, but can’t get their hands on the typical meat variety. Instead, they might turn toward Beyond Meat’s plant-based offerings.”
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