Beyond Meat Bears May Face Squeeze as Shares Recover From Lows

(Bloomberg) -- Beyond Meat’s and its shareholders’ plan to sell shares was great news for short sellers but the respite may be short-lived as high borrowing costs and limited stock supply could force them into a short squeeze.

With borrow rates of 138% for existing shorts and as high as 240% for new positions, "a BYND short squeeze is still looming on the horizon," financial analytics firm S3 Partners head of research Ihor Dusaniwsky cautioned in a note on Tuesday.

"Stock loan recalls keep hitting the streets; there is virtually no stock borrow supply left on the street to cover those recalls," he wrote. "If BYND’s stock price rebounds it will force some short covering as shorts realize some of today’s profits before they disappear into thin air."

Short-sellers have made $170 million on the secondary offering news but are still down $803 million in mark-to-market losses since Beyond’s IPO, S3 data show. Shorts could re-establish positions once the secondary offering comes to market, Dusaniwsky said.

A trader told Bloomberg he bought shares because he’s also expecting shorts to cover if the stock is able to keep recovering. Shares plummeted as much as 17% at the open before paring losses to less than 5%.

For now, bears are still in control. Even sell-side analysts who cover the stock see a bigger decline coming. Their average price target of $107 implies about a 50% drop from current levels.

To contact the reporters on this story: Tatiana Darie in New York at tdarie1@bloomberg.net;Drew Singer in New York at dsinger28@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Jim Silver, Morwenna Coniam

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