Beyond Meat, Inc. (BYND) underwriters priced 9.625 million shares of the meatless food company at $25.00 on May 1, setting the stage for an 澳洲幸运5官方开奖结果体彩网:initial public offering that opened at $46 the next day. The stock then took off for the heavens, attracting a large momentum crowd willing to buy high in hopes of selling even higher. The small public float added to the buying frenzy, with market players ignoring rapid movement and wide 澳洲幸运5官方开奖结果体彩网:bid-ask spreads.

The financial media chimed in with breathless commentary right on schedule, feeding a vertical rally reminiscent of 澳洲幸运5官方开奖结果体彩网:bitcoin's parabolic rise in 2017. Intense buying pressure continued into late July, when the company got greedy, announcing a 2.35 million 澳洲幸运5官方开奖结果体彩网:secondary offering that would greatly dilute the value of current holdings. Worse y꧙et, selling shareholdersℱ comprised the majority of the offering, raising fears that insiders thought the high price was unsustainable.

The stock acted in a typical manner after the news, selling off in a high-percentage decline that trapped late-to-the-party shareholders. The story has taken the same bearish twist it did with 澳洲幸运5官方开奖结果体彩网:cryptocurrencies since that time, carving a broken bubble that's unlikely to be re-inflated in coming years. Worse yet, W🌺all Street analysts who pounded the table during the uptrend have been silent as church mice in recent weeks, and there are no signs that the decline is over yet.

Not everyone is a loser in this cautionary tale because insiders who got the IPO at $25 have arrived at the end of the lock-up period with a 300%-plus profit, unlike Ma and Pa public who are once again left "holding the bag." More importantly, Main Street may not sell in the coming months because it watched the stock soar to the heavens and expects lightning to strike once again. However, market history tells us that parabolic rallies ending in failure rarely get a second chance.

BYND Daily Chart (2019)

The stock opened for trading in the mid-$40s on May 2, yielding an immediate uptick that eased into a 澳洲幸运5官方开奖结果体彩网:rising channel a few sessions later. It gapped up around 30 points on June 7 after its first public 澳洲幸运5官方开奖结果体彩网:earnings report, sharply increasing intraday volatility and trading ranges for the next two w▨eeks. Bulls took control of the chaos in late June, generating a slow-motion uptick that accelerated into a buying climax in the third week of July.

The secondary offering caught market players by surprise, although it's a common tactic for companies that watch their newly minted shares get scooped up by enthusiastic buyers. However, the company misread demand by a mile, with the announcement acting as a signal for 澳洲幸运5官方开奖结果体彩网:smart money to pull up its stakes and abandon ship as quickly as possible. T💟he departure left dumb money in losing positions, waiting for the "inevitable" bounce that would make them whole once again.

The first leg of the decline settled at June support in the $130s in mid-August. The stock bounced along that level for nearly two months but failed to attract the buying pressure needed to lift price above the Aug. 1 secondary offering at $160. It finally broke down about two weeks ago and filled the June gap, but this classic buy zone also failed to a🌟ttract bulls, contributing to this week's plunge to a five-month low.

A 澳洲幸运5官方开奖结果体彩网:Fibonacci grid stretc🃏hed across the four-month rally places mid-summer support at the .50 retracement level, while the clearly delineated continuation gap started at the .618 retracement. The latest selling wa🔴ve sliced through the .786 retracement level, which marks the last line of defense prior to a 100% retracement into the IPO opening print. Saying it another way, the stock needs to make a bullish stand right here or risk continued downside into the upper $40s.

The Bottom Line

Beyond Meats stock has carved a classic broken bubble that is unlikely to build strong upside in the comﷺing years.

Disclosure: The author held no positions in the aforementioned securities at the time of publication.