How to Make a Mania

Wall Street’s latest bubble is bursting — and I’m not talking about fake meat.

Sparkling water trendsetter LaCroix inspired a sugar-free drink movement that took the market by storm, helping parent company National Beverage Corp’s (NASDAQ:FIZZ) shares climb from $20 in 2015 to more than $120 at their peak nine months ago. If you’re keeping score at home, that’s a 500% gain in just three years.

Unfortunately, LaCroix’s market dominance looks like it’s finally gone flat. One prominent analyst recently cut his price target on FIZZ stock after claiming sales are effectively in free fall, Bloomberg reports. If you’ve been to a grocery store recently, you can probably figure out why. Countless brands of bubbly water care now crowding the beverage isle — and many of these brands sell at a steep discount to LaCroix.

This shift hasn’t gone unnoticed by investors. FIZZ shares have cratered to new two-year lows this week near $45. That’s a drop of more than 60% from all-time highs.

FIZZ

Here’s the billion dollar question: Is Beyond Meat Inc. (NASDAQ:BYND) headed for the same fate?

Market manias almost always start small.

When new products and ideas first catch on with early adopters, the herd is usually skeptical. “There’s no way that will stick,” they say.

Slowly but surely, these new ideas start to look a little less crazy. More people hop on the bandwagon. The media catches on and spreads the new idea to the masses. The cat is out of the bag. A product that was once panned as a fad is now a necessity. This is the tipping point, setting the stage for an industry explosion that permanently changes the market.

The story of Beyond Meat is no different. A few months ago, a veggie burger was a simple — and mostly undesirable — alterative reluctantly added to restaurant menus so your vegetarian friend wouldn’t feel left out while everyone else chows on animal flesh.

These souped-up veggie patties are suddenly all the rage, attracting scores of new customers and changing how people think about their food.

This abrupt change in perception is playing out to perfection in the markets. When we last checked on Beyond shares earlier this week, the stock was defying gravity as shares jumped more than 70% over just two trading sessions. The stock has become much more volatile as the week progresses, cratering 25% on Tuesday before posting a double-digit recovery by Wednesday’s closing bell.

BYND

How long BYND keeps chugging along is anyone’s guess. Eventually, Impossible Foods will hit the public markets and traditional protein powerhouses like Tyson Foods will get into the fake meat game. The projections for Beyond’s future market share won’t look as rosy anymore — and the sellers will come for the stock.

But for now, we can marvel at the bubble in real-time. We can learn a lot from the madness of the crowd…

Speaking of crazy, Elon Musk says he’s very optimistic about Tesla’s future.

Musk told shareholders at an annual meeting that Tesla’s demand problem wasn’t real and the electric car pioneer will sell more vehicles than ever before this next quarter.

Yeah, sure.

Telsa delivered only 63,000 vehicles last quarter. But the company says it’ll have no problem delivering 90,000 – 100,000 this quarter, Bloomberg notes.

We’ll see if that comes to fruition. But something tells me these numbers don’t add up. Demand problem or not, Tesla stock is down almost 30% this year.

TSLA

“We could slow it down,” Elon said about Tesla’s production, “but then that would not be good for sustainability and the cause of electric vehicles.”

Don’t worry about profitability, Tesla bulls. Elon has you covered.

Sincerely,

Greg Guenthner

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Opening Bell Fortunes and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing since 2005. In 2019, the average position in Greg’s Sunrise Fortunes portfolio outperformed the S&P 500 by 1.65x.

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