Beyond Meat Taking A Bite Out Of Short Sellers

Beyond Meat Inc BYND shares rocketed higher by another 20 percent on Monday and are now up 66 percent from last Thursday’s closing price.

Despite a better-than-expected earnings report last Thursday, the 500-percent rally off of Beyond Meat’s $25 IPO price in just over a month suggests the stock’s massive outstanding short position is playing a role in the trading.

Shot sellers aggressively piled into Beyond Meat shortly after its IPO. Beyond Meat now has an outstanding short position valued at around $813 million, or roughly 51 percent of the stock’s float, according to financial analytics firm S3 Partners. Short sellers took a $229 million loss on Friday alone and are now down $398 million overall since the stock’s IPO in early May.

IPO Bubble?

When asked about Beyond Meat on Monday, Whitney Tilson said there's a bubble in the U.S. IPO market.

“I’m not super familiar with the company. I think it’s an exciting new growth area, and like many exciting new growth areas, there are some hot IPOs. I have never bought an IPO in my life. I think we are in an IPO bubble,” Tilson said on Benzinga's PreMarket Prep morning show.

If the recent trading action in Beyond Meat in the past two days is driven by short covering rather than fresh bullish buying volume, traders can expect the stock to eventually settle back down to a valuation more in line with its fundamentals. Given the massive size of the Beyond Meat outstanding short position, however, the rally could continue for several more days if short sellers throw in the towel en masse.

Beyond Meat traded higher by 23.5 percent to $171.31 per share at time of publication Monday afternoon.

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