Beyond Meat has taken another dive after warning on third-quarter sales.
The alternative meat company fell 12% to close out last week after blaming the Covid-19 delta variant and a drop in retail orders for weaker revenue than expected ahead of its official quarterly release scheduled for early November.
The stock is down nearly 60% since a January peak and still well off an all-time high above $230 set in mid-2019. It traded at less than $96 on Friday.
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Beyond may have been unfairly maligned, according to Boris Schlossberg, managing director of FX strategy at BK Asset Management.
"The company is really misunderstood here in some ways," Schlossberg told CNBC's "Trading Nation" on Friday. "There's a future for the company but it really doesn't lie in meat. Its meat product is OK, let's admit it. … The future of all of these products is actually going to be much more in synthetic poultry and pork."
He said the texture and taste is easier to replicate with poultry and pork compared with beef. Beyond launched its Beyond Chicken line in Canadian and U.S. restaurants in July and expanded it to select grocery stores this month.
Schlossberg added that Beyond's success lies in its wholesale partnerships rather than retail sales.
"Their product has tremendous amount of advantages if they can get it down to cost," he said. "If they can just simply produce a cheaper, better product, the wholesale industry from McDonald's to your school lunches, could be a much more massive market for them than just your regular Joe consumer, and I think that's going to be the way forward for them."
Retail sales still make up the bulk of revenue for Beyond – that segment generates 74% of total sales, while food service sits at 26%.
"The key thing here is innovation and new product releases, and of course taste and cost. If they can achieve those things, I think the future is very, very bright for Beyond Meat," Schlossberg said.
Delano Saporu, founder of New Street Advisors, believes in the product but said the stock is still overvalued despite the pullback.
"The plant-based meat industry is something that's going to continue to grow but I do think the valuation is still a little bit out of line," Saporu said during the same interview.
Beyond trades at 13 times trailing sales, while the benchmark S&P 500 trades at a far less three times.
"I don't think I would be buying right now. I'd want to see it retrace a little bit more before I buy but I think on the upside, there's still some room for it to grow. This is still an area and industry that has some secular strengths," he said.