How One Guy CRUSHED IT Trading Beyond Meat
Active trading is more than just reading charts. Sentiment, news announcements and sometimes just simple logic can all play a part in making a trade, especially one that offers a big move.
That's what Guy Gentile did trading Beyond Meat (BYND)
How One Guy Crushed It Trading Beyond Meat
Beyond meat is a meatless food company (think burgers, etc.). They had an initial public offering back in late May and the stock had basically skyrocketed since.
The hype around the company and stock was a big part of that. Kind of like anything "new" that gets the "this is the next big thing to boom" vibe throughout the masses.
Granted meatless food products isn't new, but they have a burger that is apparently very good and used that fact to expand like crazy and then raise a ton of money to fund it.
Either way there were plenty of signs, that atleast in the near-term the stock was far ahead of itself.
Higher Valuation Than JetBlue and Coors?
As shared in @rollandthomas post has beyond meat seen its best days the value of beyond meat had blown past some rather larger companies that do way more business such as beer maker coors and airline operator jetblue.
I'm sure the meatless burger is good, but can they sell enough to generate more revenue than the two companies above?
The chart also gives us a nice indication that things may be a bit ahead of themselves.....
There is always a Catalyst
As you can see the stock ripped higher into earnings and gave us a nice doji candle meaning the buyers were not fully in control anymore.
Now it was just a matter of what happened at earnings. Here is the thing though, the hype around the stock was so high that even an earning beat might mean a sell off. Buy the rumor sell the news is a mantra for a reason.
Shorting with Leverage and Safety to Crush It
Mr. Gentile made a big play with the use of options (which is good cus it establishes your risk up front) by buying weekly put options heading into the earnings announcement.
If the stock goes down he has the right to buy the stock at those lower prices or he can just sell the put option for the higher valuation it has at that point.
With the stock trading around 230 on Friday he bought 230 strike prices down to the 215's in 5 point increments, thousands of them. If he was right he gets paid. If he was wrong he loses only what he spent no more.
Well, he was right and the stock is down 30 plus point from Friday's close. Just booking the profits by closing out those put options is a homerun.
However, he leveled up (and did take on my risk) by selling a bunch of the 220 calls that expire this week. Basically if the price of BYND closed below 220 this friday he will also keep all the premium collected from selling those calls.
Conviction Meets Size
There are times to make regular trades and times to load up. He saw this as a time to load the truck up and get paid. You won't always be right, but to make real money actively investing you need to take the occasional big swing when all the signs line up.
Just be sure that if you are wrong it doesn't knock you out of the game. Never put yourself in a position where one trade can blow out your whole account. Always live to trade another day.
You can read a detailed article about the trade including an interview with Mr. Gentile here:
Guy Gentile Made $4M In Beyond Meat, Sees 50% Downside By December
That's the story, but it's totally bullshit. They don't taste like meat...but vegetarians don't want them to. There have been some that have tasted real, but they actually didn't sell that well. At least they didn't seem to to me. The Morningstar Farms breakfast sausages taste real enough they'll fool some people, but not too real.
The problem is that Morningstar Farms was bought by Kellogg, and the main competitor, Boca, was bought by Kraft. These companies make the best meatless burgers and other meat replacements...and now they're owned by shitty companies that vegetarians are trying to avoid.
So, maybe these new burgers will do well in the vegetarian market, especially because many vegetarians and vegans will want to avoid these monolithic horrible companies...but they're not made for vegetarians. These new burgers from Beyond Meat and the Impossible Burger are made for meat eaters that are trying to eat healthier. Particularly the Impossible Burger, because it has genetically engineered blood grown in soy. Like WTF is that? That's for meat eaters that want their veggie burgers to bleed. That's just fucking weird.
But, meatless options are here to stay, and a ton of them will be successful. And it has nothing to do with whether or not they taste like "real" meat, because they don't have to. They just have to taste good. And despite the hype and propaganda, a bunch of them from a bunch of different companies do taste good. There are only a few that suck...and for some reason a lot of companies have chosen them to put them on their menus.
Seriously, I kid you not, the worst meat substitutes you will ever eat will cost you like $7 at a restaurant. And it will probably come to you cold. Sometimes even frozen in the middle.
But, the meatless market is pretty huge, and these companies should be watched. Just don't actually believe that crap that they have to taste like meat. That's only for meat eaters. Just certain companies have managed to propel themselves forward with their hype train.
Part of it's reality, cuz there are a lot of gross shitty meatless products out there...but that doesn't mean there aren't good ones. It just means that those companies are really good at advertising, which should be a good indicator of a good stock to make money on...but not a good investment.
Congrats on the guy in the story making a bit though.
Yeah, there is so much competition in the space and only so much money to go around. It's not like the whole population is gonna start buying this stuff tomorrow.
No, but the American obsession with massive piles of meat on their plate can't last forever. And it's expensive as hell to raise cattle, and they take a lot of water. With increasing drought, it will get harder and harder to raise cattle. It's already subsidized incredibly in America.
I think the main thing is that no one knows how to cook anymore though. Burgers are good with that. Healthier pre-made meals are probably something else to look out for in the food section for investment.
The beyond meat burger is so processed, it's not even funny. I rather have a grass fed beef burger vs. a beyond meat burger.
Wow, this was definitely a conviction trade, as Beyond Meat has a cult following and is the new pop star on the block. The momentum still favors the bulls, so this was a great reversion to the mean short trade.
Yeah, it was a big bet that worked out but looking at the factors and the chart I'd of placed a short bet too.
Think this stock will see double digits at some point in the next couple years. I just don't see how there is enough revenue in this category plus there are other big players already established.
Certainly a great trade! I am impressed with the company as I think putting out a stock offering is smart at the highs rather than needing the cash and asking for more at the lows (like Tesla).
Didn't think of it that way. Ironically, I banged a good trade on Tesla the past day buying the lows. I still have 1/3 the position booked the rest already. ;-)