Beyond Meat's stock plunge made short sellers $170 million in just 15 minutes

Beyond Meat fake meat burger

  • Short sellers made $170 million when Beyond Meat's stock slipped as much as 17% the day after reporting weak earnings announcing of a second public offering, according to data compiled by S3 Partners.
  • The gains trimmed short sellers' total post-IPO losses to $803 million.
  • Watch Beyond Meat trade live on Markets Insider.

Beyond Meat short sellers - or traders betting on its stock to fall - got a break on Tuesday.

The company's shares plummeted as much as 17% after disappointing second-quarter earnings and the announcement of a public offering that will allow some early investors to cash in on the stock's gains.Advertisement

That loss, which came in the first 15 minutes of trading, made short sellers $170 million, according to data-analytics firm S3 Partners.

Despite the paring of losses, those investors are still down $803 million in mark-to-market losses since Beyond's initial public offering in May. They also trimmed month-to-date losses to $185 million, S3 data show.

Those losses are indicative of the tough road short sellers have faced since the IPO, with Beyond shares rallying more than 800% at their peak. Also hampering Beyond bears has been a lack of stock borrow supply, Igor Dusaniwsky, managing director of predictive analytics at S3, wrote in a client note.
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Still, S3 hasn't ruled out the possibility of a short squeeze. Such an event be triggered by a stock increase that would force short sellers to exit their positions, further strengthening upside price action.

"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," Dusaniwsky said. Markets Insider is looking for a panel of millennial investors. If you're active in the markets, CLICK HERE to sign up.Advertisement

Dusaniwsky also points out that, at present time, it's more expensive to hold on to a short position than it is to own shares of Beyond Meat. Some short sellers have had to exit the trade because the expenses of holding the position eats into profits.

Because of Beyond Meat's popularity, it's unlikely to see a total reversal of its 800% gains, according to Dusaniwsky. He it's still a "Tesla-like lifestyle based long stock," which will protect its position in the market and add extra pressure to short sellers.

Only a "complete 180 degree change in long shareholder sentiment" will save short sellers yearly losses, Dusaniwsky said. Advertisement

Shares of Beyond Meat are still up more than 715% year-to-date.

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