Beyond Meat’s (BYND-Q) highly shorted shares jumped more than 60 per cent on Wednesday, fueled by a fresh wave of buying among retail traders who have sparked meme stock frenzies on Wall Street in recent years.
The company has struggled with weak sales as demand dropped for its plant-based meat patties over the past four years, triggering job cuts and measures to manage its debt pile.
With short interest at about 81.8 per cent of its free-float, Beyond Meat is one of the most shorted stocks in the market, according to data from analytics firm Ortex.
That was up from about 64 per cent last week, when its stock dropped to an all-time low after a notes exchange offer that helped the company avoid near-term default at a significant stock dilution.
“Loss-making, heavily shorted, meme-able ticker and easy to understand, the classic meme cocktail,” said Ivan Cosovic, managing director of Germany-based data group Breakout Point.
“BYND now has hundreds of mentions across retail channels. Whether this goes to infinity and BYND or just serves up another slice of fake-meat humble pie, retail is clearly having meme-fun again.”
Beyond Meat’s shares were last trading at US$5.86.
Since October 16, when the stock hit a low of 50 US cents, it has risen nearly seven-fold, driven also by increased interest from retail traders who piled into some beaten-down consumer names including Krispy Kreme (DNUT-Q), as well as GoPro (GPRO-Q) .
Beyond Meat’s shares soared 146 per cent on Tuesday, after it announced a deal with Walmart to expand distribution of some of its products at the big-box retailer.
Retail traders bought nearly US$35-million worth of Beyond Meat stock on Tuesday, the biggest single-day purchase on record, as well as about $620,000 worth of Krispy Kreme, the biggest one-day buy since late July, according to Vanda Research data.
The euphoria comes when unrelenting optimism over AI and expectations of more interest rate cuts by the U.S. Federal Reserve have lifted the market to record highs.
“There’s still capital that’s willing to take risk. It’s looking for a really short-term move and it’s certainly a trading mindset as opposed to some sort of investment capital,” said Alex Coffey, senior trading & derivatives strategist at Charles Schwab.
Highly shorted names garnered attention earlier this year with residential real estate platform Opendoor Technologies marking sharp gains following bullish posts from portfolio manager of a small Canada-based hedge fund.
The moves revived memories of the Reddit-driven meme stock frenzy of 2021, when amateur investors pushed up shares of video-game retailer GameStop and cinema chain AMC , burning hedge funds that were on the other side of the trade.
Beyond Meat shares have gained attention from retail traders this week on popular investor-focused social media platforms including Reddit’s r/WallStreetBets and stocktwits.com.
Business Insider reported that a trader named Dimitri Semenikhin was behind the enthusiasm as he lauded the company through posts on the X.com handle Capybara Stocks.
“Back at under a dollar, it was very clear to me the company was severely mis-priced and undervalued, which is why I purchased just over 4 per cent of the float pre-dilution,” Semenikhin told Reuters, referring to the recent notes exchange.
“What is extremely surprising is the scale at which this has been happening and speed and community engagement that this has formed.”
Shares of Krispy Kreme, which has dealt with weak demand as well as a failed McDonald’s partnership this year, were up about 30 per cent on Wednesday.
Roundhill’s MEME exchange-traded fund (MEME-A) advanced 5.3 per cent. The ETF, which tracks a series of retail-favorite stocks, announced Beyond Meat’s addition on Monday with the biggest weightage at around 10.2%.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
