The stock of Beyond Meat (BYND) is down 5% as the meme rally around the company’s shares fades.
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In the past five trading sessions, BYND shares have risen 28% as individual investors and traders treated the company as a meme stock. Currently, Beyond Meat’s stock has a 37% short interest, among the highest on Wall Street. This means short sellers are betting that the share price will decline.
A meme stock is a security that gains popularity among retail investors through social media. A short squeeze occurs when the price of a stock rises to such an extent that investors who have sold short must also purchase shares in order to limit their losses, causing the price to rise sharply and quickly.
Hope Evaporates
With such a high short interest, plant-based company Beyond Meat is a perfect candidate for a short squeeze, say market observers. The company’s share price has declined 97% in the past five years as its alternative meat products failed to catch on with consumers and businesses.
There had been a lot of hype and hope around the company and its stock when it went public in 2019. But unfortunately, the early promise of plant-based meat alternatives never materialized. While Beyond Meat has been a disappointment, many investors piled into the stock in recent days with hopes of making some quick money in a short squeeze.
However, this is an extremely risky situation, as stock prices that get pumped up in a short squeeze often collapse quickly. Many analysts expect Beyond Meat to eventually file for bankruptcy.
Is BYND Stock a Buy?
The stock of Beyond Meat has a consensus Moderate Sell rating among four Wall Street analysts. That rating is based on one Hold and three Sell recommendations issued in the last three months. The average BYND price target of $2 implies 52.61% downside risk from current levels.
