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Beyond Meat popped 254% in the first three months trading on the NASDAQ. Typically, as IPOs go, you might have expected a steep decline afterward.
Sure, we saw a decline as the IPO hype backed off. But it wasn't all that major. Since its IPO, Beyond Meat is still up around 160%.
That's because everybody still expects the plant-based meat trend to be massive. And Impossible Foods may have just what it takes to do even better than Beyond Meat.
2.3% of Americans called themselves vegan in 1995. That number increased to 5% in 2007. Then, it hit a whopping 14% in 2019.
Now, the meatless trend is growing as people start to jump aboard the ecological mission of slowing global warming. They also want lifestyles conducive to heart and gut health.
What does this tell us? The plant-based meat trend goes well beyond vegans.
Plant-based eaters are still a minority, but a huge enough one to influence the future of meat marketing.
If we actually transcend farming livestock, that makes Impossible Foods stock a major buy-and-hold.
Here's what you should know about this company and how to potentially get your hands on some IPO shares.
What Is Impossible Foods?
Impossible Foods is a plant-based meat company competing directly with Beyond Meat. Both are trying to get a head-start on a world they think will consist almost entirely of plant-based foods.
Whether right or not, the plant-based trend did see a nice burst after both Beyond and Impossible began selling in stores. Beyond Meat was offered at Whole Foods, and Burger King recently started offering an Impossible Whopper in Canada.
Impossible wants its meat to taste just like regular meat, with the same amount of nutrition. The company mainly wants to stave off the negative environmental impacts of large-scale animal farming while giving nutritional value to consumers.
A Stanford biochemistry professor named Patrick O. Brown started the company with this in mind. He concluded that animal farming was hurting the earth, so he wanted to find a way to make it obsolete.
Now, they're bioengineering meat. And regardless of how you think it tastes, there appears to be a market for Impossible and Beyond burgers.
How Impossible Foods Is Doing
Impossible sells its product in around 17,000 stores nationwide. The company says its sales are higher than ever, prompting it to increase production capacity more than 600% since 2019.
Greater supply of Impossible meats will lower prices on what was initially considered an "upscale" consumer good.
The big catalyst for Impossible Foods over the next few years will be this increase in production as well as a heightening of competition with new brands.
This will lower the price and make plant-based meats more accessible to the average consumer.
The good news for Impossible and Beyond, then, is that they were first. First-movers typically get to control the direction of innovation in the market.
Because they have also drilled their brands in the consumer consciousness, they will also have no trouble selling their meat to an already growing and dedicated fanbase.
So, the plant-based meat thing is a winner. And now the million-dollar question is when and how you can snap up some shares.
Is Impossible Foods a Buy After Its IPO?
The Impossible Foods IPO is expected to be worth $10 billion. Beyond Meat went public at $1.5 billion valuation, but it popped to $13 billion just three months later.
This could raise questions about whether Impossible Food stock is already inflated from early investor hype. Buyers could worry about the stock plummeting any moment after the IPO date.
At best, they might worry the stock goes flat for a while, with that $10 billion market cap growth already behind it.
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The absolute worst-case scenario would be where Impossible Foods enters a price war with Beyond Meat and they both end up tanking their stock prices.
Lyft is now on the rebound, close to its IPO price, but it has been a two-year journey getting there.
In this scenario, Lyft went public first to beat Uber to the cash. But Uber ended up leading the market. Something similar could happen with Beyond Meat, the first to go public, and Impossible Foods, which took its time.
Of course, a similar stock price drop is less likely to happen with Impossible Foods and Beyond Meat, simply because the product is different. That's because the pains of the culinary industry are much simpler than ridesharing.
For example, while plant-based meats certainly have some legal hoops to jump through, they don't have to manage the debacle of calling their drivers "employees" in some states and "contractors" in others. These conflicts tend to drag stock prices as well.
On the other hand, Impossible Foods has one job: Make plants taste like meat. And once that's FDA approved, it only needs to land deals with the biggest stores - which is happening as we speak.
Finally, here is the main "ingredient" that could help Impossible Foods dominate the market.
Why Impossible Foods Will Crush Competitors
Impossible Foods is backed by Bill Gates, who also happens to own the largest portfolio of farmland in America at 242,000 acres.
That's where Impossible Foods could have an advantage. Though Whole Foods gave Beyond Meat some initial exposure, the Whole Foods CEO came out and said it was not, in fact, great for your health, though maybe for the environment.
Beyond Meat expected a larger platform with Whole Foods - and it got that, though probably not as expected.
If competition with Beyond Meat does reach a full-scale war, Impossible Foods could have a much greater opportunity to scale. The company has little to no damage in its brand, and backing from Gates, with his farmland and environmental mission, will push the company beyond... Beyond.
Beyond Meat has scaled to more than 200,000 stores worldwide. Impossible is only a fraction of that. That's why we think its greatest growth lies ahead.
Buying this IPO can be a good thing. This is especially true now that retail investors are close to being able to buy stocks at IPO prices.
Before, this was less accessible if you were not a preferred institutional investor. Your only shot was to get the stock on a dip sometime after the IPO.
Robinhood wants to change that, however, by making stocks available for purchase on its platform at IPO prices to retail investors.
This is a historic opportunity, so it's more important than ever that you stick with Money Morning for the latest IPO updates.
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