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Impossible Foods wants to change the way you eat.

This startup’s mission to create delicious plant-based meat has earned it a legion of devoted fans and a rich feast of positive press coverage. Today, Impossible Foods’ products can be found at most supermarkets and on the menu of nationwide chains like Burger King and Starbucks.

Sizzling sales growth suggests Impossible is winning over meat-lovers concerned about their own health and the health of the planet—making 2022 an opportune time for an initial public offering (IPO).

“[T]here are millions of non-billionaires out there who are very, very supportive of our mission but they don’t have a chance to share in our success,” Impossible Foods CEO Pat Brown said in a recent interview with Forbes. “They would love to support the future of their planet and their kids and grandkids’ future, but they can’t invest in Impossible Foods. I don’t like that.”

Whether Impossible Foods’ IPO should be on your menu, however, remains an open question. After an impressive market debut in 2019, the shares of the company’s main competition, Beyond Meat (BYND), look less appealing than yesterday’s half-eaten burger. Meanwhile, Big Food behemoths like Tyson and Perdue have already developed meat alternatives of their own.

The Case for the Impossible Foods IPO

From its founding in 2011, Impossible Foods was looking to do much more than simply build a better veggie burger. The goal was to engineer something that meat eaters would love.

The company claims to make a burger that looks and tastes just like beef, but made out of plant material, rather than anything from a cow. The key ingredient is the molecule heme, which Impossible says is what “makes meat taste like meat.” Similar techniques are used in its sausage, pork and chicken nugget product lines.

As impossible as that sounds, the company’s novel approach has earned it impressive growth. Impossible Foods’ 2021 retail sales were up 85% year over year. Its products are available in 20,000 grocery stores and 40,000 restaurants.

Impossible has tapped into a growing hunger for its better burger. Swiss-bank UBS estimated a few years ago that plant-based food sales would rise from $4.6 billion in 2018 to $85 billion by 2030. Millennials, according to market research, are the most dedicated generation to plant-based meat products.

Not only are consumers looking for healthier alternatives that taste good, but concerns over climate change could only increase demand for products that would require fewer carbon emissions.

Impact investing, especially ESG investing—environmental, social and governance—has attracted tens of billions of investment capital over recent years. Impossible Foods is well positioned to benefit from these trends.

Case Against the Impossible Foods IPO

Beyond Meat, the company’s main rival, offers a cautionary lesson for would-be Impossible Foods IPO investors.

Despite an impressive start, driven by huge deals with McDonalds and Yum Brands—parent of KFC—for burgers and chicken nuggets, shares of BYND are just about equal to where they were at the end of their first day as a public company nearly three years ago, around $65 a share. As of Feb. 1, 2022, BYND had fallen by more than 60% over the prior 12 months.

There’s no doubt that the vagaries of the Covid-19 pandemic have burned restaurant sales. Some analysts expect Beyond Meat to recover lost ground as it cements future deals with other big brands, including big moves overseas.

The trouble is that Impossible Foods has more than just Beyond Meat to reckon with. Tyson, Perdue, Smithfield and Hormel have all introduced meat alternative products. While millennials may rather be caught with a Big Mac than Hormel’s Rhiza in a bun, it’s tough to go head-to-head with some of the largest consumer staples companies in the US

Should You Invest in the Impossible Foods IPO?

Despite all the momentum for meat alternatives, judged by numbers alone Americans prefer actual meat. The USDA estimates that the average American consumes 2.4 burgers per day—that’s a national diet of roughly 50 billion burgers a year.

It’s also not exactly clear that consumers would be healthier. The Impossible Whopper, for instance, comes with about as many calories as a normal Whopper and more sodium. What happens to Impossible’s health story if it turns out that people aren’t that much better off?

More importantly, what happens if Americans prefer the Lightlife Burger? Or another plant-based alternative?

If you do decide to invest after the company goes public, do so with eyes open and expect the type of swings Beyond Meat has endured. That caveat may not exactly satisfy your craving for a meat-free future, but there’s big risks involved in binging on Impossible Foods.

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