Shares of Blue Apron (NYSE: APRN) were among the best performing across the stock market yesterday as everything seemed to crash and burn. With the Dow Jones Industrial index down an incredible 2,997 points or 12.9% and the S&P 500 and the NASDAQ both down 12%, you’d be forgiven for thinking that no stock could emerge in the green on such a day.
But emerge they did, and with a 67% rally from Friday’s close, Blue Apron stock was the third best performing non-ETF across the entire stock market. For a company that’s been on the backfoot since the day their shares first went public in the summer of 2017, it must be a strange feeling that it’s taken a global pandemic to lift them off their all-time lows. As bars, restaurants and other non-essential businesses across the country are ordered to shut their doors, one fact of life remains true; people gotta eat.
What Do They Do?
Blue Apron’s business allows the average Joe to receive cold packaged fresh ingredients and chef-designed recipes. With foolproof instructions, even the biggest cereal-three-times-a-day amongst us can conjure up delicious, homemade meals. The company works off a subscription model and everything can be ordered online - you don’t even have to leave your house. A perfect business model for when tens of millions of Americans are all of a sudden working from home, told to maintain social distancing and in effect are in lockdown in their own houses.
However, it’s important to take a broad look at the company and its performance to date too. Its stock traded as high as $165 on it’s first day of trading and within a month was down 50% from those levels. Like many other companies that IPO’d in the second half of the last decade, frothy private valuations and pie in the sky numbers were brought back to reality fast as soon as shares went public. In the almost three years since then, shares are down over 98% and came close to breaking below $2/share last week.
For long term investors, it will feel as if the company’s revenue has done nothing but contract as they’ve failed to live up to any of their pre-IPO promises or potential. As recently as the middle of last month, they released their Q4 earnings which saw revenue fall 33% year on year as EPS were deeper in the red than analysts expected. Now that hasn’t stopped investors from eyeing them up and private investor Tai Lopez expressed interest in buying Blue Apron last month. For what it’s worth, he’s also the owner of meat subscription service, Farmers Box.
With Monday’s move though, there might be even more investors knocking on the door in the coming weeks as Wall Street eyes up what companies are likely to prosper during these unprecedented times.
For those looking to get involved in the stock now, it’s in an attractive technical position. Shares had been basing out around the $2 mark over the past month which provides a solid level of support and there’s clearly good momentum flowing into the bid. The stock was trading at close to $8 as recently as December so it’s no stranger to being up more than 3x from where it closed last week.
Unless a cure for the coronavirus is announced tomorrow, consumer demand for food delivery is likely to ramp higher in the coming weeks and Blue Apron is one of the best-known names in the space. Just don’t look too closely at their long term chart.
Companies Mentioned in This Article
10 Stocks to Sell in 2020
For some investors, selling stocks can be hard. It can seem like a personal failure. But it’s really just a mindset. You have to understand that waiting out a stock may be the right thing to do when time is on your side. But if you are investing for specific and/or time-sensitive goals, holding onto an underperforming stock can have a big impact.
Ideally, an investor could look at their portfolio at the end of the year and like trimming a rose bush, cut off the dead parts and move on. But with a new year upon us, it could be tempting to wait things out.
We’ve provided you this presentation to give you a look at ten stocks that you should consider selling. Some of these stocks are being affected by short-term setbacks. Others may be a buying opportunity at a lower price. That’s for you to decide.
View the "10 Stocks to Sell in 2020".