Beyond Meat shares heat up as retail traders position for a squeeze

Beyond Meat shares rose a shocking 128% on Monday, closing the day at $1.53. What the heck happened?

Retail traders were hoping for a turnaround — or more realistically, a powerful short squeeze — as the embattled plant-based meat producer scrambled to raise cash to protect its viability.

As of 7:15 a.m. ET, more money had changed hands trading the faux meat firm in the premarket than the likes of Apple, Microsoft, or Palantir.

By the end of the session, volumes had hit a point where every share in the company available on the public market could have been sold 2.8 times.

The stock cratered to an all-time low of $0.50 last Thursday after management completed a deal with nearly 97% of the holders of more than $1 billion in senior convertible notes due in 2027 to exchange those for $196 million in second lien notes due in 2030 and more than 316 million shares.

That was a massive dilution of existing shareholders that raised the company’s share count by more than 300%. Those noteholders are now far and away the biggest holders of the company’s equity.

Enthusiasm on the stock appears to have originated on — you guessed it! — Reddit, where some traders were hyping Beyond as an asset with particularly high meme stock potential.

The Takeaway

The stock was among the most highly shorted US companies heading into the month, with over half its shares sold short, per Bloomberg data. That number likely came down meaningfully in the short term thanks to the issuance of over 316 million shares as part of the aforementioned debt-for-equity-and-other-debt swap last week, which saw those who took the company up on its plans temporarily barred from transferring beneficial ownership or selling a large portion of the new shares.