NEW YORK / LONDON (IT BOLTWISE) – Beyond Meat is experiencing a spectacular rise in the stock market that brings back memories of the GameStop phenomenon. Within a few days, the share price rose 1,400 percent before falling again. The hype was sparked by a Dubai trader buying 4 percent of the shares and led to a short squeeze that put pressure on hedge funds.
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The recent hype surrounding Beyond Meat on Wall Street is strongly reminiscent of the GameStop phenomenon that sent financial markets into turmoil a few years ago. At the time, young traders drove up the video game chain’s share price, leading to a bitter duel with hedge funds. Similar to when the so-called ‘stock market kids’ were celebrated as the ‘Robin Hoods’ of the financial world, we are now experiencing a new rush on Beyond Meat shares.
The manufacturer of vegan meat substitute products has faced significant challenges in recent years. After a spectacular IPO in 2019 that brought in a valuation of $14 billion, the company has recently been struggling to survive. Sales fell nearly 20 percent in the second quarter, and a crushing debt burden led to restructuring and job cuts.
But then the turning point came: Positive news about the availability of Beyond Meat products in 2,000 Walmart supermarkets caused a stir. The real trigger for the buying spree, however, was Dubai trader Dimitri Semenikhin, who purchased four percent of the outstanding shares. This led to a so-called ‘short squeeze’, in which hedge funds that had bet on falling prices were forced to buy back shares, driving up the price further.
The situation was compounded by growing hype on social media and platforms like Reddit, where new buyers were flocking. Around 800 million shares were traded on October 20th, perfecting the new meme stock hype. However, experts warn about the risks of such speculative moves. German Wikifolio trader Torsten Maus describes the stock as ‘largely worthless’ and warns against gambling that could ultimately leave a company still struggling to survive.
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