Guy Gentile Made $4M In Beyond Meat, Sees 50% Downside By December

Beyond Meat Inc (NASDAQ: BYND) dropped more than 14% on Tuesday morning after the company reported a second-quarter earnings beat and announced a secondary share offering just months after its IPO. It was a rough morning for Beyond Meat investors but an excellent day for traders, including Guy Gentile.

Guy Gentile joined Benzinga's PreMarket Prep on Tuesday and discussed his recent trading in the stock, which he said has netted him $4.2 million this year.

After a big day for Beyond Meat on Friday, Gentile said he sold weekly call options ahead of the Monday report as a way of betting on downside.

“You just have options positioning themselves for what could potentially happen, so you have people hedging their positions, you have CNBC telling people to buy it, that they should buy some shares, just retail getting pumped into this stock. And what I did [Monday] was I basically sold the $230 calls all the way up to the $270 calls, so I have an average price of maybe $255-$260 just in case it spiked in earnings,” he said.

Unrealistic Expectations

Gentile believed market expectations had gotten so high for Beyond Meat that no matter what they reported on Monday afternoon, the stock would likely drop to between $165 and $185 on Tuesday. As of late morning trading, Beyond Meat’s low for the day was $183.50.

“It’s kind of like bitcoin at $20,000. Once you’ve sucked in all the retail, there’s nothing left to buy at that point,” he said.

Gentile said no institution in their right mind is buying Beyond Meat at a $14 billion valuation. He said Beyond Meat may find institutional buyers at $60 per share, but certainly not at $240.

“The only reason why it’s here is because of the overnight interest fees and the small float and cheap options [from last week]...and also shorts being trapped,” he said. He said many short sellers were too aggressive with Beyond Meat in the beginning.

Option Market Signals

Gentile said activity in the options market late last week suggested Beyond Meat was approaching the end of its big move, noting that large pre-market moves to new highs are capitulation moves and signs that clearing firms are attempting to blow people out of their short positions.

In light of that, Gentile said he bought weekly put options, giving him the right to buy back the stock at a lower price.

“On Friday, I banked $1.2 million in the first 20 minutes because my read into Friday was that the $200 calls were going to get assigned coming into Friday morning...Friday right out of the gate, I went massively long puts right at the opening bell. I bought probably 2,000 or 3,000 contracts of the $230s and the $225s and the $220s, and it dropped down to $215,” he said.