Vegan meat company Impossible Foods plans to go public within a year, but investors are questioning whether the company can meet its $10 billion valuation target.
New U.S. vegan meat startup Impossible Foods plans to go public with a valuation target of $10 billion, but some investors and analysts are questioning whether that goal is too ambitious as Wall Street’s appetite for the plant-based meat industry turns sour.
Reuters reported in early April, citing sources, that Impossible Foods plans to go public within 12 months, either through an initial public offering (IPO) or a merger with a special purpose acquisition company (SPAC). Some organizations predict that the artificial meat market could reach $85 billion annually by 2030.
However, Beyond Meat, another artificial meat company that is larger and more operational than Impossible Foods, has seen its market value fall from a peak of $14 billion to $8.5 billion. The company’s market cap, which has ballooned 420 percent since its September 2019 IPO, now seems clearly “overheated,” according to several brokerages.
Morris, executive director of venture capital firm Eat Beyond, said, “The first reaction to hearing the $10 billion valuation figure for Impossible Foods when Beyond Meat is valued at $8.5 billion is, is that valuation flying in from outer space?” Some existing investors in Impossible Foods are reportedly suggesting that the IPO valuation should be set below Beyond Meat.
The artificial plant meat market has recently raised alarm bells, indicating that it has yet to gain traction with consumers. According to NielsenIQ, retail sales of raw and cooked plant-based meat alternatives grew 32.6 percent in the third quarter of last year, but the growth rate dropped to 1 percent in the first quarter of this year.
Beyond Meat’s revenue last year was only $407 million, but the stock’s cost-benefit ratio was nearly 21 times higher. In comparison, the traditional food manufacturers Kellogg’s (Kellogg) last year’s revenue of $13.78 billion, the stock of 1.6 times the cost-benefit ratio; Kraft Heinz (Kraft Heinz) last year’s revenue of $26.19 billion, the cost-benefit ratio of 1.9 times.
Impossible Foods is even worse than Beyond Meat. The industry estimates that Impossible Foods accounts for less than 4% of the artificial meat market, compared to 25% for Beyond Meat, and Impossible Foods has yet to obtain marketing licenses from the European Union and China because it uses genetically modified yeast.
Why is Impossible Foods’ valuation so high? Investment experts say the main reason is that SPAC really has too much money and few investment targets, plus new start-up companies often have a big jump in share prices after they go public, and investors expect to make substantial profits, so the fundamentals are not the focus for now.
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