Beyond Meat - Buy the Earnings Dip? First Check the Chart

Beyond Meat stock is trading lower despite a solid earnings report. Let's check the chart to see whether there's an opportunity on the horizon.
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Beyond Meat  (BYND) - Get Report stock is getting hit on Wednesday, down about 6% at last check, even after the plant-based-meat company reported solid second-quarter results.

A loss of 2 cents per share missed estimates by a penny, while revenue of $133.3 million soared almost 70% year-over-year and easily topped consensus expectations that called for just under $100 million in sales.

Gross margin widened 0.9 percentage point to 34.9% and topped expectations as Beyond Meat is trying to pivot its bottom line toward the right side of break-even.

All this taken together wasn’t enough to keep shares from falling 8.5% at Wednesday’s low. On the plus side, we have seen shares bid up off the session lows. But is that enough to make it a buy?

Trading Beyond Meat Stock

Daily chart of Beyond Meat stock.

Daily chart of Beyond Meat stock.

The earnings report seemed like something the bulls would pounce on. That’s particularly true as the shares had pulled back for about six weeks from the June highs before breaking higher out of this falling-wedge look. That pattern is highlighted on the chart above with blue lines.

As good as the setup looked, keep in mind that Beyond Meat rallied 5.9% on the day it reported after the close, as well as 6.7% in the prior session. In all, the shares racked up a 15.5% gain in the three days leading up to earnings.

More important, Beyond Meat stock is holding a key breakout level I flagged a few months ago. I said, “If it can [clear $117], it puts Beyond over multiple layers of resistance and puts a test of $130 resistance in play. Over that and $160 is a longer-term upside target.”

The $130 to $135 area has been relevant to Beyond Meat stock for more than a year now. It’s holding $130 as support and is above it now, while also holding the 20-day moving average. 

What the bulls want to see is a rotation back over the 50-day moving average.

In that case, it puts the pre-earnings August high in play at $142.51. From there it puts the 123.6% extension in play near $155, followed by the 138.2% extension at $167.75, which comes within pennies of the 2020 high.

On the downside, a move below $130 puts Beyond Meat stock below a key level, as well as the 10-day and 20-day moving averages. 

A breakdown of this caliber will put $120 in play, followed by a potential test of the 200-day moving average.

While the initial reaction is less-than-enthusiastic, let’s see if Beyond Meat can gain momentum on the upside as buyers stepped in and bid shares up off the morning lows.