Beyond Meat’s stock faced a significant downturn on Thursday, marking a notable departure from the impressive gains it had achieved earlier in the week. Following a remarkable surge that saw the stock rise over 1,300% just days prior, the plant-based meat company found itself struggling after experiencing a loss of approximately 1% on Wednesday. This downward trajectory continued on Thursday, with shares dropping as much as 23% at one point.
The volatility in Beyond Meat’s stock is primarily linked to a high level of short interest, which is a crucial factor in the dynamics of meme stocks. According to data from S3 Partners, short-sellers of Beyond Meat have seen severe financial repercussions, with an estimated $120 million in paper losses recorded since the close of trading last Friday. Prior to this rally, these same investors were up by $80 million for the year, but the rapid fluctuations in stock price have flipped their fortunes, leading to a current loss of approximately $45 million in short-selling positions.
Ihor Dusaniwsky, managing partner at S3, provided insights into the plight of short-sellers. He noted that the current year has turned unprofitable for those betting against Beyond Meat since its year-to-date low on October 16. As a result, shorts are now facing mark-to-market losses totaling about $45.1 million, representing a 48% decline for the year. Since mid-October, the mark-to-market losses for these positions have escalated to over $119 million, equivalent to a staggering 243% decline.
In response to these mounting losses, many short-sellers have been compelled to cover their positions by purchasing approximately 5.7 million shares since last week. Currently, the total short interest in Beyond Meat stands at about $129.6 million, with 36.19 million shares shorted, accounting for 49% of the company’s float.
The catalyst for the recent stock rally appears to be retail trader Dimitri Semenikhin, known online as Capybara Stocks, who made headlines on Reddit by announcing his acquisition of a significant percentage of Beyond Meat’s outstanding shares. His post is believed to have sparked heightened interest in the stock, drawing comparisons to the infamous GameStop short squeeze phenomenon of 2021.
As Beyond Meat’s stock continues to fluctuate, the evolving situation reveals significant implications not just for investors, but also for the broader market dynamics often influenced by retail trading forums and trends.
