Why Beyond Meat shares have surged 1,000% in four days

Products from Beyond Meat Inc, the vegan burger maker, are shown for sale at a market in Encinitas, California, US, June 5, 2019.

Appetite for Beyond Meats plant-based burgers is shaky. But traders sure seem to developed a taste for its stock.

Shares in the company have soared about 1,000% over four days - a stunning rally for a company that had seen its share price all but wiped out since it debuted on the stock exchange six years ago.

The business has been struggling with sluggish sales - and has not posted a quarterly profit in more than five years - as shoppers turn away from its meat alternatives.

The surge has reignited debate whether the activity, propelled in part by online enthusiasm among everyday investors, is a sign of an overly frothy stock market.

Momentum started to build last week, when a Reddit user helped fuel a wave of purchases, drawing comparisons to other rallies of so-called meme stocks such as GameStop and AMC.

The gains continued after Roundhill Investments on Monday added the company to the bucket of companies owned by its meme stock ETF, or exchange-traded fund. The move appeared to spark a so-called short squeeze: as the stock price surged, the many investors betting against the company were forced to buy shares to cover their losses.

The company also announced a distribution deal with Walmart on Tuesday, further boosting its shares.

This company was essentially being thought of as going out of business not that long ago, said Mark Hackett, chief market strategist at Nationwide.

Getting a positive catalyst like the Walmart deal, which could be transformational with the rebound of demand and getting products in the hands of consumers - that is absolutely the trigger, he added, referring to the stock surge since last Friday.

But Mr Hackett cautioned that the Walmart deal to expand distribution doesnt necessarily fix all the issues.

Youre really trading on emotions and technicals, versus fundamentals, Mr Hackett said.

The company remains on shaky ground. Its share price, at just over $4 on Wednesday afternoon trading in New York, remains well below its all-time high of more than $230 in 2019.

The Beyond Meat meme stock surge comes against a backdrop of jitters about an overvalued stock market.

At the forefront are concerns about a possible bubble emerging in the artificial intelligence (AI) industry. Those worries have intensified as analysts struggle to see how the vast sums of money the biggest players are throwing at one another all fit together.

JP Morgan Chase boss Jamie Dimon echoed the concerns this month. He told the BBC he was far more worried than others about a serious market correction, which he said could come in the next six months to two years.

The Securities and Exchange Commission has also noted possible market manipulation tied to meme stocks, warning of the risks to everyday investors.

Some have responded with calls for tighter rules around short selling and social media-fuelled trading. But there is little sign such proposals are gaining traction.