Blue Apron Holdings Inc: Up 450% Already, More to Come?

A Soaring Stock in a Plunging Market

In a market crash, checking one’s portfolio can be a painful experience. But if you happen to have Blue Apron Holdings Inc (NYSE:APRN) in your portfolio, things might be a lot more bearable.

You see, while every ticker seems to be dropping to the floor, APRN stock is actually shooting through the roof.

Here are the numbers: on March 13, Blue Apron stock closed at $2.28 per share. As of March 19 around 12:30 p.m., the stock traded at $12.55 apiece, marking a gain of 450% in less than four trading sessions.

Just take a look at the chart below. When major stock market indices were falling so hard that they triggered circuit breakers, this tech stock managed to skyrocket.

Blue Apron Holdings Inc (NYSE:APRN) Stock Chart

Chart courtesy of StockCharts.com

Now, you are probably wondering why a tech stock can have a rally like this despite the overall bearish market sentiment, especially when the much bigger tech companies like Alphabet Inc (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL) are still deep in the doldrums.

Well, the answer lies in the nature of Blue Apron’s business.

Launched in 2012, Blue Apron is an American meal kit delivery company. Consumers can choose from the company’s numerous chef-designed recipes and get a box of fresh ingredients delivered to their doorstep. Then they follow the step-by-step instructions to cook their meals at home.

According to the company, its mission is “to make incredible home cooking accessible to everyone.” (Source: “Investor Relations,” Blue Apron Holdings Inc, last accessed March 19, 2020.)

Now it should become pretty clear why APRN stock is such a hot ticker. There has been a worldwide outbreak of the novel coronavirus, also known as COVID-19. The World Health Organization has characterized it as a pandemic.

In the U.S., there are now more than 10,000 total cases—in all 50 states, the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands. (Source: “Cases in U.S.” Centers for Disease Control and Prevention, last accessed March 19, 2020.)

President Donald Trump has declared a national emergency to combat the coronavirus. Several cities are shutting down and many restaurants and bars are closing their doors.

Meanwhile, shoppers have been clearing out supermarket shelves. When dining out is not an option and grocery store shelves are often empty, Blue Apron’s meal delivery service could come in handy.

While the company hasn’t said anything about how its business is doing lately, the assumption is that, as cities continue to shut down, people will have to cook at home.

Add in the fact that people may not even want to go out to get groceries due to the fear of catching the virus, and there will likely be an increasing demand for Blue Apron’s meal kit delivery service. This could be a turnaround opportunity for the company.

According to its most recent earnings report, Blue Apron generated net revenue of $94.3 million in the fourth quarter of 2019, which represented a 33% decline year-over-year. (Source: “Blue Apron Holdings, Inc. Reports Fourth Quarter and Full Year 2019 Results and Provides Corporate Update,” Blue Apron Holdings Inc, February 18, 2020.)

Meanwhile, the company’s adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) slipped seven percent from a year earlier to $8.3 million.

Net loss came in at $21.9 million for the fourth quarter, or $1.66 per diluted share, compared to $23.7 million and $1.83, respectively, in the same prior-year period.

A good turnaround story should cheer up investors, even in today’s market environment. If the company’s next earnings report shows much better numbers, it could lead to more upside for Blue Apron stock.

Analyst Take

I should point out that, after a small stock experiences a massive surge, it tends to see some pullbacks. So I wouldn’t expect the rally in APRN stock to go on indefinitely.

However, because the company’s business is well positioned to grow during the current state of emergency, Blue Apron stock still deserves investor attention.