Beyond Meat stocks plummeted Tuesday after the company's stock selling expired. The lockup expiration has allowed for around 75 percent to 80 percent of the outstanding stock is available in public markets for trading.
According to CNBC, shares were down by 24 percent on Tuesday morning as insider selling was expected to ramp up. By midday trading, shares were still down 19 percent, sending chills among traders who were once very excited when the vegan food manufacturing giant went public in May.
The lockup period for selling company stocks lasts for up to 180 days and with the stock now available for sale in the market, investors are waiting on how much selling pressure Beyond Meat shares will overcome within the next couple of days.
CEO Ethan Brown already made it clear that he will not sell his shares even after the initial public offering (IPO) lockup period expiration. He did acknowledge that some employees may sell their shares due to certainty.
While the company was at the center of global markets on Monday after it posted third-quarter earnings that exceed analyst expectations, Tuesday cast a dark shadow on the possibility that investors are starting to lose interest in the once-stellar stock.
Instead of markets focusing on the plant-based-meat firm's stock closing over 320 percent more than its IPO price on Monday, investors rushed to sell their shares as soon as they could for profit-taking purposes.
Business Insider reported that due to the selling lockup expiration, Beyond Meat has lost almost 25 percent in market value. Markets.com chief analyst Neil Wilson noted that many early investors believe it is the right time to cash out.
The technical aspects of going public have affected Beyond Meat's stellar performance ever since it debuted in public. Industry experts noted, though, that the sell-off is part of the process among public companies.
As of Tuesday, Bloomberg data stated that the company has three "sell" ratings from market analysts and two "buy" ratings. Analysts also gave out eight "hold" ratings for the stock.
Meanwhile, some industry experts expressed confidence in the plant-based-meat provider despite an apparent decline in market interest. Risk Reversal Advisors' Dan Nathan said the company is still on the right track towards achieving its targets.
Tim Seymour of Fast Money said Beyond Meat has been working on effective partnerships and these collaborations could build momentum for the fourth quarter, creating a diversion from a focus on the lockup expiration.
Still, others are less optimistic about the company's place in the competition. Mad Money's Jim Cramer argued that Nestle and other competitors are still a stumbling block in Beyond Meat's path towards dominance.
