This one-time penny stock just surged 146% on the Nasdaq! Is it heading higher?

Shares of Beyond Meat (NASDAQ:BYND) have been sizzling in the Nasdaq Composite index lately. They soared 146% yesterday (21 October) and have now gained over 600% in just four trading days.

In this time, Beyond Meat has gone from a $0.52 penny stock to almost $4, giving the plant-based meat firm a $1.4bn market cap.

Whatâs going on? And can this red-hot rally keep going?

Why Beyond Meat is on fire

For those who donât know, Beyond Meat produces plant-based meat alternatives (burgers, sausages, meatballs, etc). And there appear to be three main reasons behind the massive share price spike.

First, the company has struck a distribution deal with Walmart, expanding its products into more US stores. Walmart will be among the first retailers to offer the new Beyond Burger 6-Pack, which is the firmâs âmeatiest, juiciest burgerâ, with 21g of protein and no GMOs or cholesterol.

Second, Beyond Meat has been added to the Roundhill Meme Stock ETF. Yes, thatâs genuinely a thing, proving that there’s literally an exchange-traded fund (ETF) for everything! This officially anoints it as a speculative meme stock.

And finally, a short squeeze is under way. In other words, traders who’d bet against Beyond Meat have been buying back shares to cover their positions, pushing the stock even higher.

Weak fundamentals

I considered Beyond Meat stock back in 2021, and there were some things I liked. These included a recognisable brand, growing sales, large market opportunity, and the fact that it was founder-led.

However, the firm was loss-making and didn’t appear to have a durable competitive advantage. The valuation was also very frothy, so I didnât invest.

Looking back, Iâm relieved because since then, the stock has crashed more than 95%!Â

Beyond Meat has struggled to grow sales in recent years. In 2023, it reported a net loss of $338m on revenue of $343m. In 2025, itâs expected to record another substantial loss on lower revenue (around $282m).

The problem is that consumer adoption of plant-based meat alternatives has been slow. In hindsight, the idea that carnivore consumers would switch en masse to pea protein patties was a tad optimistic.

In Q2, the companyâs revenue fell nearly 20% to $75m, with a $29.2m loss. The gross margin also weakened, from 14.7% to 11.5%.

Needless to say, these are worrying numbers. And with over $1bn in debt at the end of June, and only $113m in cash, I can see why this was recently valued as a penny stock.

Where next?

Now, I wouldnât touch this stock with a bargepole. But itâs worth noting that the company recently announced a move to convert roughly $1bn of debt into stock. Reducing headline debt makes the balance sheet look less terrifying. But the cost was massive dilution (about a 400% increase in total share count!).

Earlier in October, short interest accounted for approximately 64% of Beyond Meatâs total free float, making it one of the most shorted stocks on Wall Street. Hence why itâs currently gaining serious attention on Reddit and Stocktwits.

Therefore, I won’t be surprised if this meme stock keeps climbing for now. To reach its 52-week high, it would need to rise another 83%. But when the music stops, I don’t fancy being left without a chair. I don’t think it’s one to consider.

The post This one-time penny stock just surged 146% on the Nasdaq! Is it heading higher?Â appeared first on The Motley Fool UK.

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Ben McPoland has no position in any of the shares mentioned. The Motley Fool UK has recommended Walmart. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.