Hatch

Hatch Weekly: Fake meat goes mainstream

Beyond Meat brings the impossible to Wall Street

Vegans rejoice. Beyond Meat (BYND) surged to epic heights on its IPO day last Thursday, making it known to both vegans and carnivores alike, that animal protein alternatives are tantalising to the markets. And now you can buy their sizzling shares on Hatch. There will be puns – delicious ones. You’ve been warned.

The proof is in the patty

Beyond Meat had the biggest first-day jump of any US IPO since 2000: a “whoppering” +163%. Beyond Meat might be a food company (shhh, don’t tell anyone), but with a post-IPO valuation of 40 times its revenue, it’s getting the Silicon Valley treatment of a fast-growing tech company. Investors know a good thing when they see it, and they’ve done the research too. A 2018 Nielsen survey says 6% of Americans are vegetarian, and 3% of them are vegan. That doesn’t sound promising; however, 39% want to eat more plant-based foods and less animal-based ones to stay healthy and help the planet while they’re at it. Even Ikea wants a piece of the meat pie: the furniture retailer is working on a new version of its famous Swedish meatballs but made from plant-based alternative proteins.

A pea-based protein money making machine

Beyond Meat can thank grocery stores that stock their product and the restaurants serving their boeuf for investors splashing that cash. 58% of their revenue comes from the 15,000 grocers hawking their delicious wares. The remaining 42% comes from the future-forward fast food chains like Carl’s Jr., TGI Fridays, and BurgerFi who want to serve this tasty alternative alongside their popular beef burgers. Why the IPO? Beyond Meat issued 9.5 million new shares to new investors to raise money to expand globally. CEO Ethan Brown was also clear that they intend to deliver products that taste great, are cheaper, and have sustainability benefits. We look forward to seeing what other alternative meat products they’ll cook up with this new source of funds.

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Berkshire invests in Amazon (finally)

The Oracle of Omaha has finally given up the ghost...on his long-held investing philosophy of not touching the tech sector. Warren Buffett’s Berkshire Hathaway (BRK.B) has purchased its first stake in Amazon (AMZN).

Buddies with Bezos

Mr Buffett has a 54-year investment career which has helped make him one of the richest men in the world, but he didn’t make all that money from tech shares – he’s played it safe with unglamorous companies that develop everyday products people need. That said, he’s been flirting with the idea of tech: last year Berkshire announced a joint healthcare venture with Amazon and JPMorgan Chase (JPM). Buffett himself says he’s an “idiot” for not having bought Amazon sooner. Just two years ago Buffett told investors that their share price looked too expensive. And he’s not the only one who missed out. Shares in Amazon have more than doubled since the start of 2017, and last Friday they rose more than 3% once news got out that Berkshire was buying in. Of course, we have no idea how many Amazon shares they now own. It could be a few million or billion, either way, we are eagerly anticipating Berkshire’s mid-May filing where all will be revealed.

The past is the past is the past

Berkshire’s long-standing aversion to the tech sector stems from an ill-fated 2011 investment in IBM(IBM). IBM was Buffett’s first bet on tech, but not his last – we all know he’s a believer in Apple (AAPL). Before then, he focussed his investments on banks, other financial services, and consumer goods groups like Coca-Cola (KO), which he still drinks every day at 88 years old! 2014 and early 2015 would have been the best time for Buffett to buy Amazon shares – its share market value has gained $800 billion since that time. Ah, not even billionaires are safe from hindsight and regret! And they’re not safe from repeating past mistakes either: Buffett passed on Uber 18 months ago.

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