May 10, 2022

The Impossible Foods IPO

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Written by: Stephen Masters

Valuation ~$10 billion 

Expected IPO in Mid-2022

Impossible Foods is attempting to change how we eat. Makers of the Impossible plant-based burgers seen in Burger King and White Castle, and other plant-based meat replacement foods, have created a sizable following of vocal fans and consistent press coverage that bends toward the positive. Impossible, is entrenched itself in nationwide supermarkets and even Starbucks, with its products in the same sections as meat-based items, trying to change our eating habits and reduce the climate impact of the food industry. Significant sales growth in the “meat replacement” space has seen and is likely to continue in the coming years. Is a 2022 IPO the right time to go Impossibly public, and is Impossible worth an investment?

In a recent Forbes interview, the Impossible CEO Pat Brown said, 

“There are millions of non-billionaires who are very, very supportive of our mission, they don’t have a chance to share in our success…(but)…would love to support the future of their planet and their kids and grandkids’ futures, but they can’t invest in Impossible Foods. I don’t like that.

Is this just more marketing hype for an IPO, or is it his true feeling? It is hard to say, but it still leads to whether you should put Impossible Foods on your plate of investments? Impossible has had a quick rise to fame with an Impossible Burger market debut in only 2019. Their direct competitor, Beyond Meat (BYND), IPO’d in 2019 at $66/share and was touted as “a watershed moment for plant-based meat” and quickly rose to over $230/share but has fallen back to earth and has had a bad last year.  

Big Chicken has taken note, with Perdue and Tyson already marketing their own meat alternatives.  

What does Impossible have going for it?

Impossible Foods had its founding in 2011, with a goal to not just build a tasty veggie burger, but to create one that even carnivores would love. The company believes that they have created a burger that has the same taste as beef but is made from all plant materials, no cows. The key ingredient that Impossible and others are using is “heme.” The claim is that heme is what gives meat its flavour, and Impossible has used similar techniques to create an entire line of alternative products like sausage and chicken nuggets. The results of their efforts are being seen with substantial growth. For 2021 Impossible’s retail sales were up 85% over the previous year, with Impossible products available in 40,000 restaurants and 20,000 grocery stores; this is a good sign.  

Impossible has been at the forefront of a movement for a better burger. The Swiss bank UBS estimates that between 2018 and 2030, plant-based food sales will grow from $4.6 billion to $85 billion, with Millennials leading the push due to their dedication to plant-based products, looking for healthier alternatives, and over climate change concerns.

Environmental, Social, and Governance (ESG) investing has been attracting tens of billions in investment capital, and Impossible Foods has positioned itself to benefit from this ongoing trend.  

What challenges does Impossible face?

Impossible’s main competitor, Beyond Meat, will provide Impossible IPO investors with a cautionary tale. Beyond started with huge McDonald’s and Yum Brands (KFC) deals for their burgers and chicken nuggets, but Beyond has now fallen well below its $65/share IPO, then rising over 500% in its first two months of trading. Covid-19 has killed restaurant sales, and many analysts think that Beyond Meat will recover with increased relationships and overseas moves.  

The problem facing Impossible Foods is competition from Beyond Meat and established food producers; Tyson Smithfield, Hormel, and Perdue all have meat alternatives, and it will be a challenge to take on some of the largest U.S. consumers staples companies. 

Is the Impossible Foods IPO worth an investment?

Even with the new momentum of meat alternatives, Americans still prefer animal products. Estimates from the USDA of 50 billion total burgers consumed a year would mean we eat, on average, nearly three burgers a week. And Impossible burgers are not as healthy as they claim, with the Impossible Whopper having the same number of calories and more sodium than a traditional Whopper.  

What happens to Impossible if Americans end up preferring a competitor’s choice? 

A decision to invest in the Beyond IPO should be made with full knowledge of the swings seen by Beyond and the potential treacherous landscape of the foods business. Know what you are putting on your financial plate, and know it may not be easy to wallow. 

To stay up to date with Impossible foods and all the other upcoming IPOs, visit Preipohunter.com and get the IPO Guide for 2022.

To stay up to date on upcoming IPOs visit preipohunter.com and download the IPO Guide For 2022.

Visit ipowise.net to learn about the Starlink IPO.

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