In the previous stock market crash, checking one’s portfolio was likely to be a painful experience. But if you happened to have Blue Apron Holdings, Inc. (NYSE:APRN) in your portfolio, things might have been a lot more bearable.
You see, while many tickers were dropping to the floor, APRN stock was actually shooting through the roof.
Here are the numbers: at the beginning of March, Blue Apron stock was trading at around $2.50 per share. Today, it’s about $10.00, marking a gain of over 290% in just over three months.
Just take a look at the chart below. When major stock market indices were falling so hard that they triggered circuit breakers, this small-cap 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 could have a rally like this despite the overall uncertain market environment.
Well, the answer lies in the nature of Blue Apron’s business.
Launched in 2012, Blue Apron is an American meal-it 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 June 18, 2020.)
Now it should be 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 two million total cases—in all 50 states plus 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 June 18, 2020.)
President Donald Trump declared a national emergency to combat the coronavirus. Cities were ordered to shut down, and many restaurants and bars remain closed to this day.
At the height of the panic, shoppers were clearing out supermarket shelves. When dining out was not an option and grocery store shelves were often empty, Blue Apron’s meal delivery service came in quite handy.
In the first quarter of 2020, Blue Apron generated $101.9 million of net revenue, marking an eight percent increase from the fourth quarter of 2019. Meanwhile, the company’s number of customers grew seven percent sequentially to 376,000. (Source: “Blue Apron Holdings, Inc. Reports First Quarter 2020 Results,” Blue Apron Holdings, Inc., April 29, 2020.)
For the quarter, Blue Apron reported a net loss of $20.1 million, which was in line with its previously issued guidance range.
While the second-quarter results are yet to become available, the company did say that “Subsequent to the first quarter Blue Apron has seen significant increase in demand following the various stay at-home and restaurant restriction orders and other restrictions on consumers that have been enacted throughout much of the country in response to the COVID-19 pandemic.” (Source: Ibid.)
When cities were shut down, people had to cook at home. And even as restrictions begin to be lifted, some people may still not want to go out, due to their fear of catching the virus. We could see a continued increase in demand for Blue Apron’s meal-kit delivery service.
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.
I should point out that, after a small stock experiences a massive surge, it tends to see some pullbacks. And that’s exactly what has happened with APRN stock: it has pared some of the gains since peaking in March.
However, because the company’s business is well positioned to grow in this unprecedented environment, Blue Apron stock still deserves investor attention.