By Jonathan Stempel
Jan 26 (Reuters) - Beyond Meat has been sued by shareholders who accused the struggling plant-based meat producer of defrauding them by concealing its need for a big asset writedown, culminating in a 61% drop in its share price.
According to a proposed class action filed on Friday, for much of last year Beyond Meat publicly emphasized its focus on cutting expenses and expanding margins, without disclosing it might need to write off long-lived assets such as a manufacturing plant,
equipment and leases.
The lawsuit in Los Angeles federal court said the truth emerged last fall as Beyond Meat delayed financial results and then took a $77.4 million writedown, leading to a $112.3 million third-quarter loss. Falling sales, including a 21% decline in the United States, also weighed on results.
Beyond Meat's share price fell from $2.84 on October 24, when it warned a writedown might be needed, to $1.12 on November 12, after it disclosed the writedown.
Shareholders led by Mustafa Aljendan said they bought Beyond Meat stock at artificially inflated prices because the El Segundo, California-based company and top executives misled them about Beyond Meat's prospects. They are seeking unspecified damages to recoup their losses.
Beyond Meat did not immediately respond to requests for comment on Sunday and Monday.
The company has not posted an annual profit since going public in 2019, and overall sales are on pace to decline for a fourth straight year. Impossible Foods is among Beyond Meat's rivals.
Beyond Meat's share price peaked at nearly $240 in July 2019. The shares traded down 2 cents at 89.5 cents in early Monday trading.
(Reporting by Jonathan Stempel in New York; Editing by Andrea Ricci)
