By Deena Shanker, Lydia Mulvany, Mike Hytha, and Bloomberg
Updated: May 2, 2019 5:47 PM ET

Beyond Meat Inc. piled on the market value, serving up the year’s best first day for a U.S. initial public offering.

The maker of vegan beef and sausage substitutes soared, rising as much as 192 percent from its IPO price of $25 share. The shares, which opened at $46, closed their first day of trading Thursday up 163 percent to $65.75 in New York, giving the company a market value of about $3.8 billion.

The first-day pop eclipsed the 81 percent gain by Silk Road Medical Inc. in its U.S. debut last month and was the best for a U.S. listing raising at least $200 million since before the 2008 financial crisis. Globally, Beyond Meat bested the debuts this year of all but a handful of small listings, none of them larger than $22 million.

Beyond Meat raised $241 million from the sale of 9.63 million shares on Wednesday, after increasing its marketing range for them to $23 to $25.

The company’s business and Hollywood celebrity backers, including Microsoft Corp. co-founder Bill Gates and actor Leonardo DiCaprio, helped explain the investor zeal, along with a growing consumer appetite for meat alternatives.

Investor and actress Jessica Chastain, who is a vegan, said she cooks Beyond Meat products at home, to the approval of her non-vegan husband and friends.

Toronto Burger

“I love any plant-based product,” Chastain said in an interview at the Nasdaq exchange. She said she invested in Beyond Meat after being on set in Toronto and being unable to find a Beyond Burger at an A&W restaurant. “I tried for four months in Canada to get one and it sold out everywhere,” she said.

Chief Executive Officer Ethan Brown doesn’t expect a conflict between making environmentally based decisions and those that serve shareholders.

“Consumers are looking for products that enable them to be healthier and reduce their footprint,” he said in an interview. “Every time we’re making a sale we’re furthering our mission and increasing sales.”

International Potential

One food-industry consultant said investors are taking a lot on faith with money-losing Beyond Meat.

The company’s valuation in its IPO is “entirely reasonable if it’s got internationalizable potential and a great product, and has capacity to make money in its core profit structure,” said Robert Lawson, chief executive officer of London-based Food Strategy Associates. “But it’s not clear that Beyond Meat is that.”

The company will need to expand its product range to succeed outside the U.S., where burgers aren’t as popular, Lawson added.

Consumers are looking for more plant-based meat alternatives because of concerns about health, animal welfare and the environment. Startups like Beyond Meat are tapping into that demand by offering beef-like versions of the veggie burger and other meat products.

Supermarket sales of meat alternatives surged 19.2 percent to $878 million for the year ended Jan. 5, according to data from Nielsen. The field is crowded, with Silicon Valley-based Impossible Foods also placing its meatless burgers in thousands of restaurants, including all Burger King locations. Nestle SA makes a plant-based Incredible Burger, which is available in McDonald’s Corp.’s German locations.

TGI Fridays, Del Taco

Beyond Meat is sold in grocery stores nationwide and is also increasingly being featured on restaurant menus, including TGI Fridays and Carl’s Jr. and now under a new deal with Del Taco Restaurants Inc. Its burger patties, with no cholesterol and 5 grams of saturated fat, are made of pea protein and beet juice, which makes them “bleed” when cooked. That compares with 80 milligrams of cholesterol and 9 grams of saturated fat for a 4-ounce patty of 80 percent lean beef.

And despite the company’s mission, Brown said the company will choose the customer over the planet when necessary.

“Our packaging is not great,” he said, referring to the plastic wrap. “That runs counter to what I believe in in terms of ability to recycle things and the overall footprint of that packaging, but we care about the quality of the product. So we will make trade-offs that make sense for the product and market instead of the most environmental path.”

Shrinking Losses

Beyond Meat shrank its 2018 loss, while its revenue more than doubled for the second year in a row, according to its filings. Last year, it lost $29.9 million on revenue of $87.9 million compared with a 2017 loss of $30.4 million on revenue of $32.6 million.

The company had significant shortages in 2017 and 2018 and has since made significant investments to keep up with demand, Brown said.

“Now it’s about sequencing customers,” he said. Quick-service restaurants have thousands of locations, so supplying them requires a huge jump in output. To keep up, Brown said, the company has been staggering rollouts.

Brown said he wants to eventually lower the price of the company’s products, which currently can cost twice as much as standard ground beef. Beyond Meat wants to sell its products for less than animal protein in the next five years, he said.

McDonald’s Ex-Chief

Beyond Meat’s investors include former McDonald’s Chief Executive Officer Don Thompson and venture capital firm Kleiner Perkins Caufield & Byers LLC, which owns 16 percent of the company, and Twitter Inc. co-founder Ev Williams’s Obvious Ventures with 9 percent, according to its filings.

Its backers had included Tyson Foods Inc., the largest U.S. meat producer. Tyson sold its 6.5 percent stake in Beyond Meat, according to a statement in April. Tyson’s shares were sold both to insiders and new shareholders, Brown said.

The offering was led by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Credit Suisse Group AG. Beyond Meat trades on the Nasdaq Global Market under the symbol BYND.

More must-read stories from Fortune:

—From 2017: Silicon Valley and the Search for Meatless Meat

—The 9 biggest IPOs of all time

—The uncomfortable truth about going public with a money-losing business

How the Kleiner Perkins empire fell

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