Deep Sail Capital, an investment management company, released its third-quarter investor letter. A copy of the letter can be downloaded here. Deep Sail Capital Partners returned 14.2% net of fees in Q4 2025, with an average long exposure of 84%. For 2025, the Fund has returned 34.8%, with an average net long exposure of 82%. The Fund performed favorably compared to both of its benchmarks, the Russell 2000 Mid Cap Growth Index and the Russell 2000 Index, in the fourth quarter. Further, the Fund generated mo ...

Company Leadership Transition - Impossible Foods CEO Peter McGuinness has stepped down after nearly four years, with responsibilities now assumed by an executive leadership team rather than a single CEO [1] - The new leadership team includes Jason Gao (chief legal and operating officer), Meredith Madden (chief demand officer), and Robert Haas (chief supply officer) [1] Performance and Strategy - Under McGuinness's leadership, Impossible Foods reportedly outperformed the broader plant-based category through innovation, demand creation, and critical distribution gains, although specific data was not provided [2] - The company has faced pressure in the overall US plant-based meat market, with category sales in decline [3] - McGuinness's tenure included efforts to reposition the Impossible brand, emphasizing that plant-based meat can be "more food- and taste-forward" [3] Future Directions - Impossible Foods has partnered with food-tech start-up Equii to expand its product pipeline with selected grain-based products [4] - The company aims to construct a sustainable business that supports its sustainable mission, as stated by McGuinness [4]

Core Viewpoint - Beyond Meat is facing severe financial difficulties and is likely to file for bankruptcy in the coming years, with its stock having plummeted 99% over the past five years [1]. Financial Performance - The company has a current market capitalization of $445 million and is burdened with $1.2 billion in debt, which it is unlikely to repay [3][4]. - Beyond Meat reported a net loss of $110 million in Q3 2025, which is worse than its performance in Q3 2024, and total net losses for the first nine months of 2025 reached $193 million compared to $115 million in the same period of 2024 [7]. - The company has been experiencing declining revenues for multiple years, making it increasingly difficult to achieve profitability [6]. Debt Management - Beyond Meat recently restructured its debt, eliminating $800 million in 0% APR convertible notes due in 2027 and replacing them with new 7% APR convertible notes due in 2030, effectively extending its debt maturity by three years [5][6]. - The restructuring indicates the company's desperation to manage its financial obligations, but the increased interest expenses will further strain its financial situation [9]. Market Position - Despite being a meme stock that has outperformed the S&P 500 with a 19% gain year-to-date, the volatility of Beyond Meat's stock raises concerns about its sustainability [2]. - The company's gross margin stands at 5.98%, reflecting ongoing challenges in achieving operational profitability [5].

Group 1 - Beyond Meat appointed Tony Kalajian as chief accounting officer and principal accounting officer, effective January 12, following the termination of the previous officer Yi (Jevy) Luo [3][9] - The appointment comes amid ongoing financial challenges for Beyond Meat, including a material weakness in internal controls related to financial reporting [4][9] - Kalajian's role will focus on improving the company's accounting and financial processes, which have been identified as inadequate [4][5] Group 2 - Kalajian will receive an annual base salary of $325,000, with an annual bonus opportunity of up to 35% of his base salary, and a one-time cash bonus of $35,000 upon taking the role [7] - Beyond Meat's gross profit for the third quarter ended September 27 fell by approximately 50% to $7.2 million, indicating a significant decline in sales and profit [8]

Core Insights - Beyond Meat faces a significant pricing disadvantage compared to standard beef, with its ground beef equivalent priced at approximately $7 to $8 per pound at Walmart [1] - The pricing gap has narrowed due to a historically small U.S. cattle herd and rising beef prices, which have increased by around 15% over the past year [2][8] - Despite the rising beef prices potentially benefiting the plant-based meat market, Beyond Meat's lack of pricing power remains a critical issue [7] Pricing and Market Dynamics - The plant-based meat market is experiencing price deflation, forcing Beyond Meat to lower its prices, indicating a lack of pricing power [5] - In Q3 2025, Beyond Meat reported a 10.3% decline in volumes and a 3.5% decrease in revenue per pound, highlighting that lower prices are not boosting demand [6] - The overall market for plant-based meat in the U.S. is shrinking as competition increases, with store-brand options undermining Beyond Meat's brand strength [6] Consumer Behavior and Alternatives - Rising beef prices are influencing consumer behavior, leading some shoppers to consider alternatives, but the shift is primarily towards chicken rather than plant-based options [9] - There is no strong indication that consumers are switching to plant-based meat despite the narrowing price gap with beef [8]

Core Insights - Beyond Meat, Inc. has released its 2024 Corporate Responsibility Report and the Beyond Burger IV Life Cycle Assessment (LCA) study, marking its first submission to the CDP [1][4] Corporate Responsibility Report - The report emphasizes the company's commitment to health, nutrition, packaging, climate impact, supply chain management, and responsible leadership [2] - It includes a corporate-level greenhouse gas (GHG) inventory and a breakdown of U.S. packaging materials by weight [2] Life Cycle Assessment (LCA) - The LCA for the Beyond Burger IV, which now includes avocado oil, was conducted in accordance with ISO recommendations and underwent third-party review [3] - Compared to an industry average U.S. beef patty, the Beyond Burger IV requires 97% less land use, 92% less water consumption, generates 88% less greenhouse gas emissions, and requires 28% less non-renewable energy [7]

Core Insights - Beyond Meat's stock has significantly declined, down 68% year to date and 99.5% from its all-time high, indicating a severe loss of investor confidence [1][2] - The company is facing a lack of demand for its plant-based products, suggesting that initial growth may have been a temporary trend [4] - Financial performance has deteriorated, with a 13% year-over-year revenue decline in Q3 and a gross margin drop from 17.7% to 10.3%, resulting in a net loss of $110 million [5] Market Performance - Beyond Meat's current stock price is $1.23, with a market capitalization of $1 billion [6][7] - The stock has experienced a 52-week range between $0.50 and $7.69, reflecting significant volatility [7] - Despite challenges, the company reported $291 million in trailing 12-month revenue, indicating some ongoing consumer interest [7] Strategic Actions - The company is attempting to manage its financial situation by taking on debt and reducing costs to maintain operations [8] - An expansion of its partnership with Walmart has been a recent positive development, contributing to a brief resurgence in retail investor interest [7]

Core Viewpoint - Beyond Meat has significantly underperformed the S&P 500 since its IPO, losing over 99% of its value in the past five years, while the S&P 500 gained 84% during the same period [2][3]. Performance Overview - Beyond Meat's stock surged post-IPO in 2019 but has since faced a disastrous decline, with a 93% drop over the last three years and an 83% decline in the past year [2][3]. - The S&P 500 has outperformed Beyond Meat by 183 percentage points over five years, 158 percentage points over three years, and 94 percentage points in the last year [2][3]. Market Demand and Competition - Demand for plant-based meat alternatives in the U.S. has faltered post-pandemic, with retail sales of refrigerated plant-based burgers dropping 26% year-over-year [4]. - Beyond Meat's products lack differentiation in a crowded market, leading to diminished pricing power as consumers turn away from the category [5]. Financial Performance - In the third quarter, Beyond Meat reported a 13.3% revenue decline, a gross margin of 10.3%, and a net loss of $110.7 million on sales of $70.2 million [6]. - The company's guidance for the fourth quarter anticipates revenue between $60 million and $65 million, indicating ongoing struggles [6]. Stock Market Activity - Beyond Meat's stock has experienced volatility, including a plunge after a convertible debt exchange and a brief spike during a "meme stock" rally, followed by another decline [8]. - The current stock price is $0.86, with a market cap of $0 billion and a gross margin of 5.98% [7].

Financial Data and Key Metrics Changes - Total net revenues decreased by 13.3% to $70.2 million in Q3 2025 compared to $81 million in the year-ago period, primarily driven by a 10.3% decrease in the volume of products sold and a 3.3% decrease in net revenue per pound [20][21] - Gross margin fell to 10.3% in Q3 2025 from 17.7% in the year-ago period, impacted by lower volumes and higher trade discounts [8][26] - Net loss was $110.7 million in Q3 2025 compared to $26.6 million in the year-ago period, with net loss per common share increasing to $1.44 from $0.41 [30][31] Business Line Data and Key Metrics Changes - U.S. retail net revenues decreased by 18.4% to $28.5 million, driven by a 12.6% decrease in volume and a 6.6% decrease in net revenue per pound [23] - U.S. food service net revenues decreased by 27.3% to $10.5 million, primarily due to a 27.1% decrease in volume [24] - International retail net revenues decreased by 4.6% to $15.8 million, with a 12.5% decrease in volume partially offset by a 9.1% increase in net revenue per pound [24][25] Market Data and Key Metrics Changes - The plant-based meat category continues to face general softness, with two of the top three markets in the EU also experiencing year-over-year declines [22] - The U.S. market is seeing reduced points of distribution and weak category demand, impacting overall sales [22][23] Company Strategy and Development Direction - The company is focused on a turnaround strategy, including addressing misinformation about plant-based meats, rebuilding distribution, and reducing operating expenses [10][15][17] - New product innovations, such as Beyond Chicken Pieces and the Beyond Test Kitchen, are aimed at enhancing consumer engagement and product visibility [11][12][14] - The company is targeting a gross profit margin of over 30% and aims to achieve EBITDA-positive operations as soon as possible [31][40] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with the current quarter's results but emphasized ongoing efforts to reset the business for sustainable growth [6][19] - The macroeconomic environment remains challenging, making it difficult to forecast operating results beyond a limited horizon [33] - The company anticipates net revenues in Q4 2025 to be in the range of $60 million to $65 million, reflecting ongoing demand weakness [33] Other Important Information - The company successfully reduced debt levels by approximately $900 million, nearly 75% of total leverage, and extended the maturity of most of its debt profile [6][34] - Cash and cash equivalents were $131.1 million as of September 27, 2025, with net cash used in operating activities increasing to $98.1 million for the nine months ended September 27, 2025 [31][32] Q&A Session Summary Question: What is currently holding the company back from achieving higher gross profit margins? - Management indicated that lower top-line revenue is the main drag on margins, along with higher material costs and the impact of a depreciation charge related to China operations [38][39] Question: Can you provide an update on the cash balance following recent financing activities? - Management noted that the cash balance would include proceeds from the ATM program, but specific figures could not be provided at that time [41][42]

Core Insights - Beyond Meat reported third-quarter net revenue of $70.2 million, a decrease of 13.3% year-over-year, but exceeded the Street consensus estimate of $68.96 million [1][2] - The revenue decline was attributed to a 10.3% decrease in product volume sold and a 3.5% decrease in net revenue per pound, driven by weak category demand [2] - The company reported a loss of 47 cents per share, missing the Street consensus estimate of a loss of 31 cents per share [2] Revenue Breakdown - Revenue from US retail was $28.5 million, down 18.4% year-over-year [7] - Revenue from US foodservice was $10.5 million, down 27.3% year-over-year [7] - International retail revenue was $15.8 million, down 4.6% year-over-year, while international foodservice revenue was $15.3 million, up 2.3% year-over-year [7] Future Guidance and Strategic Initiatives - The company is guiding for fourth-quarter net revenue in the range of $60 million to $65 million, below the Street consensus estimate of $70.0 million [5] - Beyond Meat is focusing on cost reductions, expanding gross margin through investments, and pursuing strategic growth initiatives to achieve sustainable operations [5][4] - Recent financing transactions included the exchange of 2027 convertible notes and an at-the-market offering, aimed at reducing overall leverage and extending debt maturity [3][4]