After a rough Tuesday, the stock market had recovered by Wednesday afternoon, with all the major indices posting gains after President Donald Trump commented that a U.S.-China trade deal could arrive sooner than expected. The market appeared to ignore the impeachment inquiry against Trump launched by the House of Representatives.
Data source: Yahoo! Finance.
While the market was up, shares of Match (NASDAQ:MTCH) and Beyond Meat (NASDAQ:BYND) were left out. Match was sued by the FTC over a variety of issues, and investor sentiment on Beyond Meat soured as fake-meat competition heated up.
The FTC swipes left on Match
The Federal Trade Commission announced on Wednesday that it was suing online dating company Match for allegedly tricking consumers, exposing them to the risk of fraud, and engaging in other deceptive and unfair practices.
Shares of Match, which owns Match.com, Tinder, OkCupid, Plenty of Fish, and other dating sites, were down 2.3% at 1:35 p.m. EDT. The stock was down as much as 8.5% earlier in the day.
Image source: Getty Images.
The core of the FTC’s complaint is related to the methods by which Match.com entices nonpaying customers to upgrade to a paid subscription. Match sends emails to nonsubscribers when they receive likes, favorites, emails, and instant messages on Match.com, but responding to messages requires a paid subscription. The FTC alleges that Match allowed accounts known to be likely fraudulent to generate these notices, thus leading to consumers buying a subscription only to find that a scammer had attempted to contact them.
Other issues raised by the FTC include hard-to-understand disclosures and deceptive billing and cancellation practices. The FTC also alleges that Match banned users who disputed charges from using services they paid for and that the company violated the Restore Online Shoppers’ Confidence Act by failing to provide a simple way to stop recurring charges.
Beyond the fines and penalties that could result from this lawsuit, Match might be forced to change its business practices in a way that hurts its growth rate or profitability. The stock trades for more than 11 times trailing sales and 42 times earnings, so any hit to revenue or profits could send shares tumbling.
More competition for Beyond Meat
Shares of imitation-meat company Beyond Meat had dropped 4.9% by 1:35 p.m. Wednesday, one day before products from rival Impossible Foods were set to roll out to certain grocery stores on the East Coast.
Impossible Foods launched its plant-based Impossible Burger in 27 grocery stores in Southern California last week. Previously, the Impossible Burger was not available to be bought and cooked at home. On Sept. 26, the Impossible Burger will launch at all 100 Wegmans locations in seven states, as well as at select Fairway Market locations in Manhattan. This East Coast launch will quintuple the number of grocery stores at which the company’s products are available.
Impossible Foods plans to expand its retail presence throughout the fourth quarter and into early 2020. This move will add yet another fake-meat product to increasingly crowded grocery store shelves. In addition to Beyond Meat’s products, Kellogg and Hormel are rolling out their own takes on the category, and Kroger will soon bring private-label fake-meat products to its stores. It won’t be long before consumers are overloaded with highly processed meat-alternative options.
With Beyond Meat valued at dozens of times its expected annual sales, escalating competition is bad news for the unprofitable company.