(Reuters) -Once a Wall Street darling worth roughly $14 billion, Beyond Meat ( BYND ) is now a meme stock.

While the company's decline started after the pandemic when rising inflation made its expensive products unattractive, a consumer shift toward healthier foods amid the "Make America Healthy Again" movement and the rise of weight-loss drugs expedited its demise.

"There have been lots of questions raised about how plant-based meat is produced in an age when many people are choosing to seek out simple alternatives like beans and pulses," said Danni Hewson, a financial analyst at AJ Bell.

The stock has slumped to 50 cents from its July 2019 peak of $239.71, but has logged a near seven-fold increase in the past four sessions. On Thursday, the shares were down about 20% at $2.90 in volatile premarket trading.

This is not a sign of recovering demand, analysts said, but rather an indication of a short squeeze, fueled by a wave of buying among retail traders that has forced bearish investors to rush to cover their short positions. 

After years of phenomenal growth, Beyond Meat ( BYND ) has recorded declining annual sales since 2022. It has never turned an annual profit. 

DEAD CAT BOUNCE

The company's survival hangs in the balance. Though it has never flagged a going-concern risk, Beyond Meat ( BYND ) last month launched a debt-for-equity swap to help it avoid near-term default on its credit. The move hugely diluted its stock.

It also hired a chief transformation officer and announced layoffs in August.

Buying more time to pay off its debt may have helped put bankruptcy concerns to rest for now, but restoring investor confidence will require a serious reboot, restructuring experts said.

"They've got liquidity to go for the next year, but they have to figure out their growth prospects," said Tim Hynes, global head of credit research at Debtwire.

The company was not immediately available for comment on its liquidity position and its plans to revive sales.

ROARING START, MURKY FUTURE

Founded in 2009, Beyond Meat ( BYND ) was born out of concerns over climate change, human health, and animal welfare. A decade later, the company made a blockbuster market debut, with shares jumping 65% in its first year as restaurants like McDonald's added faux-meat burgers to their menus.

The craze didn't just boost Beyond Meat ( BYND ) - it fueled investor appetite for alternatives like cow-free milk. Rival Impossible Foods inked similar deals with Burger King while expanding its retail distribution.

In 2019, the global faux-meat market was forecast to generate $140 billion in annual sales over the next decade, according to data from Barclays.

But since 2022 sales of refrigerated plant-based meat alternatives have seen double-digit year-over-year drops, falling to $279.3 million over the last 12 months, according to data from market research firm Circana.

Beyond Meat ( BYND ) CEO Ethan Brown has blamed the drop in its popularity on unfounded concerns about the ingredients used and processes followed in making plant-based meat alternatives.

In response, the company has been more transparent about its ingredients list. It has highlighted healthier elements such as avocado oil and plant-based protein sources, including yellow peas and fava beans.

"What the company needs to do now is explore options such as equity buyback by the insiders or getting a large activist investor onboard who can credibly certify that the firm is still a viable business. Absent that, I don't see a bright future," said Amiyatosh Purnanandam, a professor at McCombs School of Business.

(Reporting by Juveria Tabassum and Aishwarya Venugopal in Bengaluru, additional reporting by Neil J Kanatt; Editing by Sayantani Ghosh and Sriraj Kalluvila)