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Beyond Meat more than doubled on extraordinarily high volume, driven by a meme-driven short squeeze.
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Today’s gains follow sharp losses last week after the group proposed offering more than $1 billion in convertible notes.
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Beyond Meat shares have more than quadrupled since the tender offer.
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The meme stock marauders were back in force today, with a surge not seen since the days of Stoppage of play And AMC Entertainment at the height of the COVID-19 pandemic.
This time it was Beyond meat (NASDAQ:PARND) ripping higher on a short press. As of 2:01 p.m. ET, the stock had more than doubled, up as much as 137% during the session.
The plant-based meat company has been one of the worst stock performers over the past five years. In fact, even with today’s drop, the stock was still down over 99% over the past five years.
Beyond Meat surged in premarket trading and continued to rally during the regular session during a staged short squeeze that began on social media sites like Reddit and X. Investors responded to posts claiming it was the top-selling stock in the United States, making it ripe for a short squeeze. As of September 30, 54% of the float had been sold short.
By the afternoon, trading volume exceeded 700 million, compared to an average of less than 20 million.
The news that helped trigger the short squeeze was a tender offer from Beyond Meat last Monday to exchange shares for senior convertible bonds, an event that created 316,150,176 new shares, increasing the number of shares outstanding by more than 4 times. The stock plunged following the news, falling nearly 75% between October 10 and 16, reflecting the company’s rapidly weakening financial situation.
However, the lockup restrictions expired at 5 p.m. ET last October 16, giving former holders of convertible notes the opportunity to sell those shares. The stock jumped 23% last Friday and is higher today as meme investors capitalize on the new liquidity to create a short squeeze.
Even with the increase in shares, the average stock has changed hands almost twice today.
Today’s jump has nothing to do with Beyond Meat’s fundamentals. In fact, the takeover bid looks like a desperate move, as the company almost certainly would have been unable to repay those bonds, which were due in 2027.
Converting them into stock eliminates that debt and gives the lenders something, rather than the pennies on the dollar they likely would have gotten in a bankruptcy.
