Popular TV Show stock analyst Jim Cramer predicts the bursting of a bubble for Beyond Meat’s shares (BYND).
Now we all know Jim Cramer to be one of the most outlandish characters ever on TV but his advice a lot of the time makes total sense. Take the case of Beyond meat (BYND) which is the meat-substitute startup that was founded in 2009 by Ethan Brown. With the stronger performances of competitors that are eating at its market share where retailers are concerned and lower liquidity ratios than expected the popular analyst believes that the bubble has burst for the premier plant supplement startup.
BYND’s stock price has fallen precariously from an all-time high of $234 to $103.80 causing many to panic that the once-hyped stock has now landed in the doldrums. This, of course, has led Cramer in his much-vaunted exaggerated style to come close to declaring a state-of-emergency on BYND’s stock.
BYND’s Shares Became too Hot too Fast
Because the momentum of the stock was going too fast the market didn’t achieve the sort of equilibrium that many had expected as regards BYND’s shares. The Los Angeles startup had done well with the premium distribution network with higher-end restaurants but not it had lost its mass-market appeal leading many savvy investors to see this fundamental flaw from afar. In addition to that, BYND didn’t have enough clout in the higher-end market to replace the market share that it was losing from the retail end.
Besides this, the liquidity crunch made the prices go higher than usual; this is Cramers’ assertion. Cramer believed that the stock’s rise was unnatural and that a similar event will happen in the opposite direction. It seems though that his assertions are just about to come true in a very big way.
Instead of BYND’s shares to enter into a cooling-off period, they have not only gone into unceremonious decline but are also the grave danger of sliding for some time. This is because, before this particular decline on Tuesday night, there weren’t enough chances for a retracement of prices to indicate a natural growth pattern in the upward direction.
Also, the collapse at the IPO unlock has contributed greatly to the sharp price reversal which will continue unfortunately for the stock. This is because the Bulls have all but disappeared into thin air. This is indicated by the 13% decline in the stock after its Q2 earnings were announced. However, a bigger “deer is in the headlights” as the “IPO Lockup” period ends on October 29%. Massive selloffs are to be expected to cause the already depressed prices to fall even further. The bears are expected un full force and prices are expected to be in their lows for a long time.
Already, Cramer has depicted BYND as the new GoPro whose shares fell about %9.6% between July 2014 and August 2016 after its seemingly promising IPO. If GoPro’s incident is anything to go by, we are certain of seeing Cramer become like another Nostradamus right before our eyes.