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Ethan Brown, founder and CEO of Beyond Meat, and guests ring the opening bell to celebrate his company's IPO at the Nasdaq Market site in New York, U.S., May 2, 2019.BRENDAN MCDERMID/Reuters

Shares of vegan burger maker Beyond Meat Inc. rose more than 160 per cent in their market debut on Thursday, as investors look to cash in on the growing popularity of plant-based meat alternatives.

The stock opened at US$46, well above its IPO price of US$25. Shares surged to US$50 just minutes after starting to trade and were halted owing to volatility. They traded up to US$72 during the day, before closing at US$65.75.

Beyond Meat closed with a market capitalization of about US$3.8-billion, based on shares outstanding including underwriters’ option.

Earlier on Tuesday, the company raised the size and price of its offering after increased demand from investors. The IPO raised US$240-million.

The money raised from the IPO gives Beyond Meat firepower to compete with other rivals in the increasingly crowded imitation meat market, such as Silicon Valley startup Impossible Foods Inc.

Beyond Meat founder and chief executive Ethan Brown on Thursday morning at the Nasdaq stock exchange called plant-based meat an “enormous opportunity for economic growth in rural America and throughout the world.”

“We understand the composition of meat, we understand the architecture and year after year we collapse the gaps between our product and animal protein,” Mr. Brown said of Beyond Meat, which counts actor Leonardo DiCaprio and Microsoft Corp. founder Bill Gates among its investors.

Beyond Meat’s existing stockholders did not sell any shares in the offering.

The company aims to market its meatless burger patties and other products to meat-loving consumers by avoiding terms such as vegan or vegetarian and instead displaying its products in the meat case of supermarkets.

Plant-based substitutes for meat have been gaining popularity as more people shift toward vegan or vegetarian diets, amid growing concerns about health risks from eating meat, animal welfare and the environmental hazards of intensive animal farming.

Tyson Foods Inc., the No. 1 U.S. meat processor, owned a 6.5-per-cent stake in Beyond Meat, but last week said it sold its holding, as it looks to develop its own line of alternative-protein products.

Burger King and Impossible Foods last month started selling their vegan burger, Impossible Whopper, in 59 stores in and around St. Louis, Mo., with nationwide sales in the United States expected by the end of the year.

Los Angeles-based Beyond Meat began selling its plant-based burger at more than 1,100 U.S. locations of fast-food chain Carl’s Jr. in January.

The company said it intends to use a bulk of its IPO proceeds for research and development, as well as building manufacturing facilities.

Beyond Meat creates substitutes for meat by using ingredients that mimic the composition of animal-based meat, such as proteins from peas, fava beans and soy, which look and cook like beef or chicken.

Currently, about 70 per cent of the company’s revenues are generated by its flagship Beyond Burger patties. The company also sells imitation sausages and vegan ground beef.

In 2018, about US$50-million of Beyond Meat’s revenue came from retail sales, including at Inc.’s Whole Foods Market and Kroger Co. supermarkets, while roughly US$37-million was generated at restaurants.

The company in filings said it planned to aggressively expand its network of restaurant partners and sales outside the United States, which currently account for 7 per cent of revenue.

But Beyond Meat also said it struggled with production capacity issues in the face of increasing demand, and interruptions in the supply of pea protein, which it currently sources from two producers in Canada and France.

Beyond Meat’s net loss narrowed marginally to US$29.89-million in the year ended Dec. 31, from US$30.38-million a year earlier. Net revenue more than doubled to US$87.93-million in the same period.

The company warned it may never turn a profit and expects higher expenses as it looks to expand its footprint.

Goldman Sachs, JPMorgan and Credit Suisse are the lead underwriters to the IPO.

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