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Blue Apron short squeeze: Sharp APRN stock price swings make share trades a risky proposition

By Rob Griffin

Edited by Jekaterina Drozdovica

14:34, 10 November 2022

In this photo illustration e-commerce Blue Apron logo is seen displayed on a smartphone
Is Blue Apron short squeeze likely as the stock falls to record lows? Photo: IgorGolovniov / Shutterstock

Shares in Blue Apron (APRN), the US meal kit maker, plunged 16% after admitting it was waiting for affiliates of key investor Joseph N. Sanberg to deliver $56.5m in funding. The New York-based company stated that its previously announced revenue growth target of 7% to 13% for full year 2022 was being withdrawn due to this delay. 

The subsequent stock price fall was the latest wave of volatility in what has been a very turbulent year for the Blue Apron share price. So, where does it go from here? In this analysis we look at how negative APRN news has affected the business and whether it’s paving the way for a Blue Apron short squeeze

What is Blue Apron?

The ingredient and meal kit maker launched in 2012. Its vision is: Better Living Through Better Food. 

The company offers “fresh, chef-designed meals” that “empower home cooks to embrace their culinary curiosity” and see what a difference cooking quality food can make to their lives.

It has stated: “Blue Apron continuously focuses on bringing incredible recipes to its customers, while minimising its carbon footprint, reducing food waste, and promoting diversity and inclusion.”

Blue Apron trades on the New York Stock Exchange (NYSE) under the APRN ticker. It went public via  an initial public offering (IPO) in June 2017 and raised $300m, with its stock priced at $10 a share.

The Blue Apron share price has started 2022 on a high, trading above $8 in February, yet swinging lower than $2 by early November in what has been a wild ride for investors. 

Since the stock listing, APRN disappointed investors, losing over 90% of its value, as of 10 November, and falling to  a record low of £1.43. APRN achieved an all-time high of $150 straight after its IPO in June 2017. In the first year of trading, the stock wiped out over 60%.

Blue Apron stock price, 2017 - 2022

Blue Apron's third-quarter results reveal losses

The most recent Blue Apron stock news came in early November when the firm announced a net loss of $25.7m for the third quarter ended 30 September 2022. This showed an improvement in comparison with the net loss of $27.6m for the third quarter of 2021.

Net revenue, meanwhile, remained flat year-over-year and was down 11.7% sequentially to $109.7m. This was blamed on the impact of seasonality and the presence in the prior quarter of a bulk sale to an enterprise customer. 

The meal provider also said an at-the-market offering had provided $14.1m to help manage short-term liquidity due to not receiving the expected funds from Mr Sanberg’s affiliates.

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According to Linda Findley, Blue Apron’s president and chief executive, the company had entered into a pledge agreement with one of his affiliates. This move “granted us a security interest in certain securities of private companies”, with a value estimated to be significantly in excess of the $56.5m. Findley added:

“In addition, midway through the third quarter, we began to identify and put in place cost-saving initiatives designed to manage expenses and improve margins, as we continue to drive towards our goal of long-term sustainable growth.”

In a conference call with investors, Findley highlighted a decline in the number of active customers to “seasonal and macroeconomic” pressures on purchasing due to the inflationary environment. 

“We found that our marketing efforts in Q3 were less efficient than in prior quarters, which equally impacted our customer count,” she added.

Is Blue Apron short squeeze likely?

Let’s consider the prospects for a Blue Apron short squeeze by first looking at the short interest position –  the volume of its shares sold short but not yet closed out or covered. 

As of 15 October, traders had sold 5,270,000 shares of APRN short, according to data compiled by MarketBeat, which put APRN’s short interest ratio at 1.0. This helps indicate if an APRN short squeeze is possible. 

The total number of shares sold short had been gradually increasing throughout 2022 and reached a peak of 5,470,000 at the end of September.

A ratio of one to four reveals generally strong sentiment on a stock, whereas a figure of 10 or greater suggests significant pessimism. 

Blue Apron stock was rated as a ‘moderate buy’ based on the views of two analysts compiled by TipRanks, as of 10 November, one of which recommended a ‘buy’ and the other a ‘hold’. The average price target was $5.50, with the highest forecast at $7 and the lowest $4. 

Final thoughts on APRN short squeeze

Note that analyst forecasts and views on Blue Apron short squeeze can be wrong. You shouldn’t use them as a substitute for your own research. Always conduct your own due diligence before trading, looking at the latest news, a wide range of commentary, technical and fundamental analysis. 

Note that past performance does not guarantee future returns. And never trade money you cannot afford to lose. 

FAQs

What is Blue Apron’s current stock price?

The Blue Apron stock price stood at $1.45 at market closed on 9 November.

Is Blue Apron a publicly traded company?

Yes, it is. The company went public in June 2017 and trades on the New York Stock Exchange (NYSE) under the ‘APRN’ ticker.

Should I buy APRN stock?

That is down to your opinion of the company. While you can consider the views of analysts, it’s important to acknowledge they can be wrong so you need to form your own opinion.

You should always conduct due diligence before trading, looking at the latest news, a wide range of analyst commentary, technical and fundamental analysis. Note that past performance does not guarantee future returns. And never trade money you cannot afford to lose.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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