Shares of Beyond Meat (NASDAQ:BYND) exploded yesterday on a report that McDonald’s (NYSE:MCD) will permanently include the McPlant burger in its offering.
However, shares then erased most of the gains to close “only” 7.57% up, after McDonald's said it has no news to share about the Beyond Meat partnership.
The Bloomberg report cited an executive of McDonald’s who said that the vegan burger was sticking around in the United States and that it would be joined by new Beyond Meat products.
“The McPlant has been part of our global core menu lineup since November 2020 for markets to pull down as they choose to,” a McDonald’s spokesperson stated. “There are no new updates in the U.S.”
The initial report from the fast-food company was later corrected, stating that the McPlant will remain a “core menu item” instead of “permanent”.
McDonald’s introduced the McPlant vegan burger in the U.S. in 2021 before including the item in more locations in February. Multiple fast-food chains have been testing plant-based menu items to lure more vegetarians and those who are looking to eat less meat.
Mizuho analyst John Baumgartner weighed in with the following comments:
“Let’s assume the news is true and eventually McPlant will be adopted nationwide as a permanent item. The launch would contradict industry reports that the expanded test market has not tracked favorably and today’s BYND stock reaction indicates the limited degree to which MCD business is priced into shares. We estimate every 1% share of MCD’s U.S. nationwide beef burger business captured by McPlant may translate into $40MM of annual sales for BYND and, set against FY22E revenue of ~$600MM, the relationship could theoretically prove sizable,” the analyst commented in a note.
Piper Sandler analyst Michael S. Lavery remains bearish on BYND despite the rumors.
“Even with a permanent launch, we expect a modest (~$20M) lift vs our current LTO expectations. There is also a risk that MCD brings production inhouse at the end of its 3-year contract with Beyond. Its MCD launch has little lift for retail sales, given its lack of branding at MCD. We remain cautious on its outlook given its cash burn, weaker balance sheet, and growth outlook.
McDonald’s stock is down nearly 1%.
By Senad Karaahmetovic