October 22, 2019 | 2:45 PM by Fahad Khalid | fkhalid@jaguaranalytics.com

Trade Alert: Beyond Meat

Trade Alert: One of Top Short Ideas from Q4 Outlook

Beyond Meat
Ticker: BYNDSector: Food Processing
Current Price: $141.50
First Target: $125.00
Stop Loss: $160.00
Time Duration: 37 days

Trade Idea – Buy BYND November 140-125-110 Put Butterfly Spread for $3.70 debit or less.

Specifically:

  • Buy to open 1x November 140 puts for $20.50 debit
  • Sell to open 2x November 125 puts for $11.00 credit
  • Buy to open 1x November 110 puts for $5.20 credit

Alternate Trade – Buy November / October (25) Weekly 130 put calendar spread for $8.50 debit or less. If you go with this calendar spread, the short leg was picked with October 25 expiry so that in ideal scenario it expires worthless for max gains, allowing you convert the November puts into a vertical spread into catalysts explained below.

BYND will be a Top Short recommendation in upcoming Q4 Outlook which I haven’t released yet. This is the second pick from this Outlook in which I am issuing trade alert early. Unlike most of our research which is driven by hard facts and channel checks, the write up here you will find much more opinionated than anything. It is to be expected when you are dealing with stocks in bubble territories swimming with frothy investors sentiment. There is a hard catalyst in play here.

On October 29th, lock up period will end which will allow insiders to dump shares on the market freely. Collectively, the CEO, CFO, Board of Directors as well as VC insiders have already dumped 3 million shares a month ago after getting approval from IPO underwriters, while telling the general public that it was secondary offering (not insider selling). Of 3.3 million shares they dumped, only 300,000 was secondary, while the rest were simply insiders selling early.

On October 30th company will report earnings. While I generally expect a good quarter, but I don’t believe company can maintain +60% CAGR growth rate for next 10 years which is what analysts are basing their assumptions.

Technically, chart has major air pocket below if it starts to breakdown below $140 that could send it as low as $100/share. Please note both option structures advised above are chosen to take these catalysts as well as technical picture in mind while keeping the cost of entry as low as possible.

See full bear case on stock HERE.

Fahad

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