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So the biggest problem here is that Beyond Meat has a huge debt due in just 2 years: That’s a problem given that $1 billion in convertible bonds come due i

So the biggest problem here is that Beyond Meat has a huge debt due in just 2 years: That’s a problem given that $1 billion in convertible bonds come due in March 2027. Beyond Meat has no way to repay that debt, and the credit markets know it: The bonds currently trade at about 17 cents on the dollar. To put the "$1B" number into the context, Beyond Meat sold $300M worth of plant-based meats last year, and made a net operating loss of $156M. Their total assets are $600M, and the market capitalization is only $260M as of today. If they could magically become profitable at 10% profit margin, it would take 20+ years to repay the debt. It's hopeless.

Workaccount2 1y ago
[flagged]
- zahlman 1y ago
  > Eschew flamebait. Avoid generic tangents. Omit internet tropes. > Please don't use Hacker News for political or ideological battle. It tramples curiosity. It seems clear that the purpose of your comment is to "drag" an unrelated company.
chronogram 1y ago
That's got to be an incredible expenditure then. Considering their pricing compared to the better store brand alternatives, while not lacking any scale disadvantages, I expect high margins on the products themselves.
bartread 1y ago
And this as well: > The company expects the figure to reach about $330 million in 2025, roughly 10% higher than it was six years earlier despite a huge increase in the number of products offered. It’s not like they have any growth potential to speak of that would enable them to service that debt. It’s a bit hard to see who their target market is or, rather, it’s a bit hard to see that the market segment they’re aiming for is big enough for them to grow at an appreciable rate. To me it reads like they just didn’t do their homework up-front - e.g., an in depth segmentation - in determining their addressable market. Vegetarians and vegans I know want protein sources in their diets but they don’t necessarily want meat substitutes, so perhaps BM’s products aren’t that appealing to them. Meat eaters possibly have low awareness of BM and, unless they’re particularly principled - and wealthy enough to absorb the additional cost - are unlikely to pay the same price, or more (at least here in the UK), for meat substitutes than they’d pay for actual meat. Moreover, people I know who are trying to cut down on meat, like their veggie and vegan counterparts, mostly aren’t looking for meat substitutes in their meat-free meals either. If BM’s products were more affordable and better advertised they’d have a better chance at widespread adoption but it’s very hard to plot a route from where they are now to there. Also, this doesn’t solve for the portion of the market who aren’t looking for explicitly meaty meat substitutes. As you say, it does appear hopeless. (FWIW, I’ve eaten BM burgers on several occasions. They’re excellent but I’m not normally willing to pay the premium for them versus actual beef patties, or making our own.)
- jebarker 1y ago
  I would guess the primary target market is ex meat eaters that are trying to go vegetarian but have been raised to enjoy the taste/texture of meat. I am in this group. I agree it’s not a very large market for the reasons you stated above. However, maybe BM hoped they could grow that market, I.e. convince more meat eaters to give it up for ethical reasons.
  - Lord-Jobo 1y ago
    I am in a similar group; the mostly-vegetarian. Chicken when I don't have a real choice, red meat at a wedding like once a year or something. I like beyond meat products, the price is obviously a problem but they go on sale locally frequently enough to be a good substitute for us. Something about them I HATE though is that they have two burger products that are extremely similar with one main difference: product A is kept frozen and requires thawing to cool properly and product B is kept frozen and cooks from frozen. They are so similar that we accidentally get the wrong one all the time. Once cooked, both products are indistinguishable from an eating perspective. Get product A the fuck outta here, please.
    - UltraSane 1y ago
      Same. Chicken, eggs, and yogurt are the only animal products I consume regularly.
  - UltraSane 1y ago
    "raised to enjoy the taste/texture of meat" Humans have evolved to enjoy the taste/texture/smell of cooked meat
    - xeromal 1y ago
      Yeah, their comment gave me a chuckle. lol
      - bartread 1y ago
mettamage 1y ago
> If they could magically become profitable at 10% profit margin, it would take 20+ years to repay the debt. It's hopeless. Why is that hopeless? Maybe I'm too green or optimistic but that just requires long-term planning. Also inflation will make it a bit easier. One thing I find tough for them personally is that I like the Impossible burger a lot more. I find Beyond meat not tasting like meat, not enough. Since that's the case, I'd rather just have any mushroom/whatever veggie burger. I wonder how other consumers perceive this.
- happyopossum 1y ago
  > Why is that hopeless? because you can’t take 20 years to pay off debt that is due in 2 years.
  - rwmj 1y ago
    Refinancing, but whoever lends them the money will take a long hard look at the rest of their finances and decide to pass.
    - bradly 1y ago
      The article mentions this as an agreement between the bondholders and shareholders, I believe, who are both mutually incentivized to come to agreement. If I understood correctly the bondholders agree to a future convertible note of some sort.
- bossyTeacher 1y ago
  > Why is that hopeless? Maybe I'm too green or optimistic but that just requires long-term planning. They don't have 20 years to pay it off. Debt is due in 2 years
- ChrisRR 1y ago
  As they just said. They sold $300M, and made a loss of $150M
bell-cot 1y ago
> If they could magically ... it would take 20+ years ... It's worse than that - 10% profit on $300M sales is only $30M/year. Vs. "risk-free" US Treasury bonds currently yield 4% to 5% - so parking $1B there would earn you $40M to $50M per year. Nobody's insane enough to loan money to Beyond Meat at US Treasury rates. And even if someone was - Beyond would still fall deeper into debt every year, because they couldn't even keep up with the interest.
airstrike 1y ago
Debt can always be restructured.
BurningFrog 1y ago
The impossible to pay debt just means the company goes bankrupt and new owners can keep operating it without the debt. That they lose 45 cents from every dollar of sales is the killer.
- chasd00 1y ago
  > That they lose 45 cents from every dollar of sales is the killer. Was it always that bad? If so, how did the business get past the spreadsheet model phase? There’s no way the typical corp “re-org” fixes that.

Workaccount2 1y ago

[flagged]

zahlman 1y ago
> Eschew flamebait. Avoid generic tangents. Omit internet tropes. > Please don't use Hacker News for political or ideological battle. It tramples curiosity. It seems clear that the purpose of your comment is to "drag" an unrelated company.

chronogram 1y ago

That's got to be an incredible expenditure then. Considering their pricing compared to the better store brand alternatives, while not lacking any scale disadvantages, I expect high margins on the products themselves.

bartread 1y ago

And this as well: > The company expects the figure to reach about $330 million in 2025, roughly 10% higher than it was six years earlier despite a huge increase in the number of products offered. It’s not like they have any growth potential to speak of that would enable them to service that debt. It’s a bit hard to see who their target market is or, rather, it’s a bit hard to see that the market segment they’re aiming for is big enough for them to grow at an appreciable rate. To me it reads like they just didn’t do their homework up-front - e.g., an in depth segmentation - in determining their addressable market. Vegetarians and vegans I know want protein sources in their diets but they don’t necessarily want meat substitutes, so perhaps BM’s products aren’t that appealing to them. Meat eaters possibly have low awareness of BM and, unless they’re particularly principled - and wealthy enough to absorb the additional cost - are unlikely to pay the same price, or more (at least here in the UK), for meat substitutes than they’d pay for actual meat. Moreover, people I know who are trying to cut down on meat, like their veggie and vegan counterparts, mostly aren’t looking for meat substitutes in their meat-free meals either. If BM’s products were more affordable and better advertised they’d have a better chance at widespread adoption but it’s very hard to plot a route from where they are now to there. Also, this doesn’t solve for the portion of the market who aren’t looking for explicitly meaty meat substitutes. As you say, it does appear hopeless. (FWIW, I’ve eaten BM burgers on several occasions. They’re excellent but I’m not normally willing to pay the premium for them versus actual beef patties, or making our own.)

jebarker 1y ago
I would guess the primary target market is ex meat eaters that are trying to go vegetarian but have been raised to enjoy the taste/texture of meat. I am in this group. I agree it’s not a very large market for the reasons you stated above. However, maybe BM hoped they could grow that market, I.e. convince more meat eaters to give it up for ethical reasons.
- Lord-Jobo 1y ago
  I am in a similar group; the mostly-vegetarian. Chicken when I don't have a real choice, red meat at a wedding like once a year or something. I like beyond meat products, the price is obviously a problem but they go on sale locally frequently enough to be a good substitute for us. Something about them I HATE though is that they have two burger products that are extremely similar with one main difference: product A is kept frozen and requires thawing to cool properly and product B is kept frozen and cooks from frozen. They are so similar that we accidentally get the wrong one all the time. Once cooked, both products are indistinguishable from an eating perspective. Get product A the fuck outta here, please.
  - UltraSane 1y ago
    Same. Chicken, eggs, and yogurt are the only animal products I consume regularly.
- UltraSane 1y ago
  "raised to enjoy the taste/texture of meat" Humans have evolved to enjoy the taste/texture/smell of cooked meat
  - xeromal 1y ago
    Yeah, their comment gave me a chuckle. lol
    - bartread 1y ago

mettamage 1y ago

> If they could magically become profitable at 10% profit margin, it would take 20+ years to repay the debt. It's hopeless. Why is that hopeless? Maybe I'm too green or optimistic but that just requires long-term planning. Also inflation will make it a bit easier. One thing I find tough for them personally is that I like the Impossible burger a lot more. I find Beyond meat not tasting like meat, not enough. Since that's the case, I'd rather just have any mushroom/whatever veggie burger. I wonder how other consumers perceive this.

happyopossum 1y ago
> Why is that hopeless? because you can’t take 20 years to pay off debt that is due in 2 years.
- rwmj 1y ago
  Refinancing, but whoever lends them the money will take a long hard look at the rest of their finances and decide to pass.
  - bradly 1y ago
    The article mentions this as an agreement between the bondholders and shareholders, I believe, who are both mutually incentivized to come to agreement. If I understood correctly the bondholders agree to a future convertible note of some sort.
bossyTeacher 1y ago
> Why is that hopeless? Maybe I'm too green or optimistic but that just requires long-term planning. They don't have 20 years to pay it off. Debt is due in 2 years
ChrisRR 1y ago
As they just said. They sold $300M, and made a loss of $150M

bell-cot 1y ago

> If they could magically ... it would take 20+ years ... It's worse than that - 10% profit on $300M sales is only $30M/year. Vs. "risk-free" US Treasury bonds currently yield 4% to 5% - so parking $1B there would earn you $40M to $50M per year. Nobody's insane enough to loan money to Beyond Meat at US Treasury rates. And even if someone was - Beyond would still fall deeper into debt every year, because they couldn't even keep up with the interest.

airstrike 1y ago

Debt can always be restructured.

BurningFrog 1y ago

The impossible to pay debt just means the company goes bankrupt and new owners can keep operating it without the debt. That they lose 45 cents from every dollar of sales is the killer.

chasd00 1y ago
> That they lose 45 cents from every dollar of sales is the killer. Was it always that bad? If so, how did the business get past the spreadsheet model phase? There’s no way the typical corp “re-org” fixes that.