Impossible Foods is a leading player in the fast-growing meat substitute market. That market is currently worth around $5.5 billion globally and is expected to expand to $85 billion by 2030.
Impossible Foods is the brainchild of CEO/Founder Dr. Patrick O. Brown, Professor Emeritus of Biochemistry at Stanford University’s School of Medicine. The company set out to analyze and isolate the factors that give meat its appeal and replicate them in a plant-based alternative.
Impossible Foods introduced its burger substitute in 2016 and upgraded its formulation in 2019. They introduced Impossible Sausage in 2020.
In April 2021, in the midst of the hottest year ever for IPOs, Reuters reported that Impossible Foods was preparing to go public, either via an IPO or through a SPAC merger, and would seek a valuation approaching $10 billion.
In 2022, with the IPO market in a deep slump, rumors had the company preparing for an IPO with a $7 billion valuation. In February 2023, the CEO stated that the IPO would happen but probably not this year. In the meantime, the plant-based meat market has seen some major disruption, with direct competitor Beyond Meat suffering a 90% decline in its stock price since mid-2021.
Where is that market going? Will Impossible Foods hold an IPO this year? What are the opportunities and risks? Can you invest before the IPO?
Let’s take a closer look.
What is Impossible Foods?
| Impossible Foods: Fast Facts | |
|---|---|
| Industry | Meat Substitutes |
| Key Competitor | Beyond Meat (BYND) |
| Key Products | Meat-free hamburgers, sausage, chicken nuggets. others. |
| Founded | 2011 |
| Founder and CEO | Patrick Brown |
| HQ | Redwood City CA, US |
| Website | www.impossiblefoods.com |
| Current Valuation | $7 billion |
| IPO Status | Private |
Impossible Foods states that the Company’s mission is to “make the global food system truly sustainable by eliminating the need to make food from animals”. They intend to accomplish this by recreating the entire sensory experience of meat, dairy, and fish in entirely plant-based products.
Impossible Foods identified a single molecule called heme, a precursor to hemoglobin, as the distinguishing factor that gives meat its flavor. They produce this molecule using genetically engineered yeast and incorporate it into their products.
The Impossible Foods burger made its debut in 2016 and was reformulated in 2019. Impossible sausage in savory and spicy variants followed in 2021, and the Company recently introduced substitutes for chicken nuggets, meatballs, and pork.
Impossible Foods products are currently available in about 25,000 grocery stores and 40,000 restaurants – including Starbucks and Burger King – in the United States, Australia, Canada, Hong Kong, Macau, New Zealand, Singapore, the United Arab Emirates, and the United Kingdom. The Company claims to be the fastest-growing plant-based meat substitute producer in the world.
Impossible Foods describes its products as a sustainable, environmentally sensitive alternative to meat. They point out that an Impossible burger uses 96% less land and 87% less water than an equivalent amount of beef while generating 89% fewer greenhouse gases and 92% less water contamination.
Where is the Market Going?
Plant-based meat substitutes were once seen as the next big thing. Venture capitalists and investors flocked to the niche, and the sky seemed like the limit. Beyond Meat, the largest publicly traded meat substitute specialist, priced its May 2019 IPO at $25. The stock was trading at $45 by the afternoon and quickly soared to over $234.
Then reality set in. Revenues stagnated and then dropped. Losses soared, and the stock tumbled.
Was that an indication that the plant-based meat substitute market is not going to be what it was once expected to be, or is it a problem specific to Beyond Meat?
Predictions for the market remain rosy.
At the same time, companies appear to be backing away from the Niche. Food giant Nestle recently scaled back its move into meat substitutes. Other players in the niche, including Oatly, Quorn, and The Tattooed Chef, have hit serious rough patches.
Analysts cite the relatively high prices of meat substitutes – significantly higher than meat – and the perception that the products are a “fad” as limiting factors.
To illustrate the price issue, Amazon sells Impossible Foods plant-based meat in bulk at $16.75 a pound. Regular ground beef sells at $5.79/lb, with grass-fed Angus ground beef at $11/lb.
It’s not clear whether Impossible Foods has been affected by this general slump in the plant-based meat substitutes market. Without a formal IPO filing, we don’t have access to audited financials. It is still a trend that potential pre-IPO investors will want to watch carefully.
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When Will Impossible Foods Hold Its IPO?
On April 8, 2021, Reuters reported that Impossible Foods was preparing for a public listing “in the next 12 months”, through an IPO or SPAC, that would see the Company valued at $10 billion or more.
As of today, no formal plans have been announced, and no S-1 has been filed. The Company may have elected to delay the listing due to overall uncertainty in the markets.
In March 2023, Impossible Foods CEO Peter McGuinness stated that a 2023 IPO was unlikely:
“I wouldn’t expect it, probably not. I mean, anything’s on the table, but we’re well capitalized at the moment and it’s not a great macro environment to do so. It’ll happen, probably not this year.”
At this point, there is no clear indication of when the Impossible Foods listing will take place. Most observers suggest that the Company prefers an IPO listing to a SPAC merger, to avoid diluting current shareholdings. The public listing move is expected when the Company believes market conditions are receptive.
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What Do We Know About Impossible Foods’ Fundamentals?
As a privately held company, Impossible Foods does not report financial figures, and until they file a prospectus, we won’t have a clear picture of the Company’s financials.
We can pick up some bits and pieces from public reports, though their accuracy is hard to verify.
- Reuters reported in April 2021 that the number of stores carrying Impossible Foods products increased from 150 to 20,000 in the past year.
- Forbes reported in Feb. 2022 that Impossible Foods’ 2021 revenues were up 85% over 2020.
- Impossible Foods claims to be the fastest-growing retail plant-based meat company.
- Impossible Foods cut its product prices by 20% in 2021, a move that could gain market share but could also affect profitability.
- Zippia estimates that 2022 revenues were $4.5 million without citing sources or methods.
Assuming that the increase from 150 stores to 20,000 in 2021 is accurate, the other claims make sense. It is far from certain that this implied growth rate is sustainable.
Impossible Foods may reveal more information about its finances and growth trajectory, or it may decide to wait until they file a formal prospectus. At this point, the publicly available information on the fundamentals of Impossible Foods is too limited to draw any meaningful conclusions.
Impossible Foods Financing
Impossible Foods has held 12 rounds of private capital, raising $1.9 billion. The most recent financing round was on Nov. 23, 2021. The Company raised $500 million in a financing round that left the Company valued at roughly $7 billion.
Impossible Foods has attracted 57 venture capital investors, including 8 lead investors. Lead investors include Mirae Asset Global Investments, Global Secure Invest, Empede Capital, Temasek Holdings, and Serena Williams.
Factor to Watch: Beyond Meat
Impossible Foods’ rival Beyond Meat held its IPO on May 2, 2019, pricing at $25 per share. In April 2021, when Impossible Foods was first reported to be seeking an IPO, Beyond Meat was trading at 400% above that IPO price.
In October 2020 Beyond Meat peaked at almost $195 per share. That peak was followed by a rapid decline, and shares are now trading at $17.67, leaving the Company valued at $1.09 billion. The drop was driven by weak sales growth and growing losses.
Some analysts think it unlikely that Impossible Foods can sustain a higher valuation than Beyond Meat, and the weak performance of Beyond Meat in the second half of 2022 may cause Impossible Foods to delay its listing until the market shows a more positive view of view plant-based meat substitutes.
How Can I Buy Impossible Foods Stock
Impossible Foods is currently a privately held company and its stock does not trade on any public exchange. Purchase through a conventional broker will not be possible until the Company holds a public listing.
There are still options for those who wish to purchase Impossible Foods shares. You may be able to buy through pre-IPO marketplaces. These marketplaces buy shares from early investors or from employees who have received stock options as part of their compensation. They then resell the shares to pre-IPO investors.
Pre-IPO Secondary Markets
These marketplaces often impose investor qualifications, and there is no guarantee or assurance that they will have available shares in any given pre-IPO company.
- Forge Global merged with Sharespost in 2020. The combined company is now the world’s largest marketplace for private company shares. Investors must make a minimum purchase of $100,000 worth of shares. The minimum may be higher for some companies. Investors may need to meet qualification requirements.
- EquityZen acquires shares from early investors or from employees who have received stock as part of their compensation. They work with companies to ensure that transactions will be recognized and sell the shares to investors who meet the revised SEC “accredited investor” criteria. There’s a minimum investment of $10,000, which may be higher for some companies.
- Nasdaq Private Market provides access to private-company shares for investors who meet the SEC’s accredited investor criteria.
- EquityBee is a private marketplace that allows investors to fund an employee’s stock options in exchange for a share of the proceeds if the stock is liquidated.
⚠️ There are substantial risks in pre-IPO investing. An IPO may not take place as expected, and if it doesn’t there may be no market for your shares. Learn more about pre-IPO investing.
📚 Review this guide to how to buy pre-IPO stock before you consider a pre-IPO purchase of Impossible Foods stock!
Invest in the IPO
If pre-IPO shares are not available or the requirements are too strict, investing in the IPO may be a better option. Many IPOs allocate limited numbers of shares to major brokers, and if your broker has a share allotment, you may be able to buy at the IPO. You may still need to meet the qualifying requirements.
You’ll have to tell your broker how many shares you’d like to buy, and there’s no guarantee that you’ll get that number or any allocation at all.
Several major brokers provide IPO investing access for clients. Different brokers have different requirements.
- Charles Schwab requires a history of 36 trades or an account balance of at least $100,000 for IPO participation.
- E*Trade has no account balance or trading history requirements for IPO participation. You may have to pass a questionnaire provided by the IPO underwriters.
- Fidelity allows IPO participation for clients who meet a minimum household asset requirement or are members of their Private and Premium client groups.
- TD Ameritrade allows IPO participation if they are part of the selling group. Participants must have a minimum account balance of $250,000 or have made 30 trades in the last calendar year.
Buying at the IPO has one major advantage over a pre-IPO purchase. At least you know that after the IPO, there will be a public market for your shares. You may not be able to take immediate advantage of that market, though. IPO share purchases typically come with a 30 or 60-day lockup period.
Invest After the IPO
If you’re convinced that Impossible Foods will be a good long-term investment, the simplest way to buy the stock is simply to wait until the IPO concludes. You can then buy through your regular broker with no restrictions or requirements. You’ll be able to sell the stock at any time you like.
You will not get the low per-share price that you’d get from a pre-IPO or even IPO investment, but you’ll face substantially less risk. You’ll also get a chance to see how the market responds to the IPO before you pull the trigger.
If the stock rises straight after the IPO your entry price will be substantially inflated, but that is by no means guaranteed. If you intend to hold the stock for an extended period the difference is likely to be minimal.
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Are There Any Concerns About Impossible Foods?
Early-stage companies are often risky investments, and the risks may be difficult to assess until the Company reveals its full financials in a detailed prospectus. Here are some things to consider before buying Impossible Foods stock.
- Impossible Foods faces significant competition. Beyond Meat is the most visible competitor, but major food industry names like Hormel, Perdue, Tyson, and Smithfield are also introducing plant-based meat substitutes. There’s no way to anticipate which products consumers will prefer.
- International expansion may face regulatory issues. Impossible Foods uses genetically modified yeast to produce the molecule it relies on for its meat-like flavor. This has raised regulatory questions in markets where GMOs remain targets of suspicion, notably Europe and China. Some consumers in other markets may shy away from the GMO connection, even where regulators are more favorably disposed.
- Uncertain market reception. Competitor Beyond Meat catapulted to dramatic gains after its IPO, only to drop solidly back to earth. Weak performance from Beyond Meat and other companies in the niche raises questions about the market’s perception of the plant-based meat substitute industry.
- Limited information. Impossible Foods is not required to disclose financials until they file a prospectus for a public listing. If you choose a pre-IPO purchase you’ll have a limited amount of information to assess the company’s current financial situation.
These risks are speculative. They may or may not emerge as significant issues. There may also be risks that are currently not known or anticipated.
Conclusion
Impossible Foods has generated considerable attention, and the IPO is widely anticipated. A number of celebrity supporters are visibly on board, and the Company enjoys a high public profile.
A high profile does not guarantee success, of course, and at this point, everything about the IPO remains speculative. The funding round last November should provide sufficient working capital for some time, so the Company should not need to rush into a public listing.
Impossible Foods clearly intends to go public, but the listing is likely to be postponed until market conditions are more stable and receptive.
You may be able to purchase pre-IPO shares through a private equity marketplace. You may be able to participate in the IPO if your broker has a share allocation.
It may be possible to purchase pre-IPO shares through private equity marketplaces or to participate in the IPO through selected brokers. In either case, you will need to go through a qualification process. You can also buy shares after the IPO.
You will need to carefully assess the company before making any investment. Consider discussing your plans with a professional investment advisor!
FAQs
Impossible Foods is a manufacturer of plant-based meat substitutes. They claim to have developed a formula that replicates the taste and texture of real meat. Products include hamburgers, sausage, chicken nuggets, meatballs, and a pork substitute.
Impossible Foods expanded from having products in 150 stores to a presence in over 20,000 stores in 2021. Revenues grew 85% over the same period.
Impossible Foods is a privately held company, and its stock is not traded on any public exchange. It may be possible to buy shares on private equity marketplaces, but share availability is uncertain and there may be requirements. You may be able to get a share allocation from your broker at the IPO, and you can easily purchase shares through your regular broker once the stock is publicly traded.
All investments involve risk, and early-stage investments are particularly risky. There’s no assurance that Impossible Foods can replicate the growth it showed in 2021, and expansion into some foreign markets may be slowed by regulatory issues driven by the Company’s GMO-based manufacturing process. Beyond Meat, a competing plant-based meat substitute company has seen a substantial drop in share value over the last six months, raising questions over the market’s perception of the industry.
