Why Did Beyond Meat Stock Jump As Much As 20% Today?

BYND +19.01%

Key Points

• A jury verdict against Beyond Meat represents more than half of third-quarter revenues.

• Beyond Meat will reportedly appeal the verdict.

• High short interest could be what's driving today's stock move.

• 10 stocks we like better than Beyond Meat ›

Beyond Meat (NASDAQ: BYND) stock soared as much as 20% this morning. So it may come as a surprise to learn that the company has just been hit with a $38.9 million legal defeat in a trademark infringement case.

Shares pared those gains, but remained higher by 8% as of 12:58 p.m. ET.

Jury verdict vs. short squeeze

The trademark violation verdict stems from a lawsuit filed for infringing on a Vegadelphia Foods trademark covering the phrase "Where Great Taste Is Plant-Based." Vegadelphia sued Beyond Meat, as well as the coffee and doughnut company Dunkin', in 2022, alleging that the defendants' advertising slogan, "great taste, plant-based," infringed on Vegadelphia's federally registered trademark. Dunkin' settled its portion of the claims against it last year.

The $38.9 million verdict is significant for Beyond Meat. Consider that the plant-based meat substitute company reported revenue of $70.2 million in its third quarter. So why did the stock soar today?

It is likely retail investors at work. Beyond Meat became a meme stock driven by social media hype last month. Shares soared more than 300% in about a week before giving back most of those gains.

The stock still had more than 20% of its float sold short as of mid-November, according to MarketWatch. The high short interest is likely contributing to a short squeeze today. Owners of Beyond Meat stock should be concerned about the jury verdict; however, focusing on the business is more important in the long term.

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Howard Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Beyond Meat. The Motley Fool has a disclosure policy.

Why Did Beyond Meat Stock Jump As Much As 20% Today? was originally published by The Motley Fool