Shares in fake meat maker Beyond Meat dropped more than 10% this week after the Wall Street Journal reported that the company is in talks with holders of $1.1bn (€1bn) of its debt about a restructuring.

Beyond Meat has been struggling for some time as consumer demand for its products has failed to grow as the company expected, leading to significant losses.

This has meant that Beyond Meat’s cash reserves have been depleted over recent years (see Figure 1).

The bond which is reportedly subject to the talks was issued by the company in March 2021 and matures - ie, has to be repaid - on 15 March 2027.

With Beyond Meat’s cash reserves so small and its failure to generate much in the line of earnings, the chance of that repayment being met seems very small indeed.

A restructuring of the debt would be bad news for those investors who bought the bond in 2021, but would also be bad news for Beyond Meat.

Cash injections

The company still needs cash injections to stay in business, as it has never managed to turn a profit.

By restructuring its debt, it is making it significantly harder for the company to try to raise new debt to continue funding the loss-making operation.

The stock market has also lost interest in the company, where shares which traded at over $220(€202) at their peak are now closer to $6.50(€6).

Beyond Meat’s problems are fundamentally driven by a lack of profitable sales of its product.

The company says that inflation has reduced consumer demand for fake meat, yet in its most recent investor update, it talked about increasing prices in order to try to turn a profit.

With layoffs announced late last year and further cost-cutting under way this year, the prospects for growth for the company seem minimal.

We have written several times before about Beyond Meat and other companies in the fake meat business and our analysis generally comes down to the view that fake meat will always be a niche product.

Beyond Meat’s biggest sales success was convincing investors that it would be a profitable company.

It seems that, like consumers, investors have also lost interest in what Beyond Meat is selling.