Warning: Dilution ahead.
Beyond Meat (BYND 5.61%) stock tumbled 8.1% through 1:50 p.m. ET Tuesday after making a pair of filings with the SEC. The upshot of the news: Beyond Meat is preparing to dilute its shareholders.
We just don’t know by how much yet.
Image source: Getty Images.
Beyond Meat Filing No. 1
On Monday, after the close of trading, Beyond Meat filed a Form S-3 prospectus, advising of plans to issue “Common Stock, Preferred Stock, Debt Securities, Warrants, Purchase Contracts, Units.”
The company said it “may offer and sell the securities identified above,” “from time to time,” and “in one or more offerings,” without giving further detail. “Specific information about the offering and the amounts, prices and terms of the securities” won’t be divulged until the offering is made.
Today’s Change
(-5.61%) $-0.06
Current Price
$1.01
Key Data Points
Market Cap
$485M
Day’s Range
$0.96 – $1.07
52wk Range
$0.50 – $7.69
Volume
68M
Avg Vol
203M
Gross Margin
5.98%
Beyond Meat Filing No. 2
This morning, the second shoe dropped. In an 8-K filing, Beyond Meat advised (1) it plans to repay its lenders in stock rather than in cash (and that stock will dilute current shareholders), and (2) it will reduce the exercise price that one of its lenders, “Unprocessed Foods,” needs to pay to exercise its Beyond Meat warrants.
The price will decline from $3.26 per share to $1.95 per share.
Presumably, this move is made to both encourage Unprocessed Food to exercise its warrants (giving Beyond Meat some needed cash) and also to reflect the fact that Beyond Meat stock is down about 70% over the past year.
Granted, the stock costs $0.99 per share today (i.e., it’s a penny stock). It’s hard to imagine Unprocessed Foods paying $1.95 to exercise a warrant to buy a share it could easily purchase on the open market for half that amount.
Still, one can hope.
At this point, I’m afraid “hope” is all Beyond Meat has left.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Beyond Meat. The Motley Fool has a disclosure policy.