Please ensure Javascript is enabled for purposes of website accessibility

Why Blue Apron Holding, Inc. Stock Was Rising Today

By Jeremy Bowman - Feb 13, 2018 at 1:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the meal-kit service rose after a better-than-expected earnings report Tuesday morning.

What happened

Shares of Blue Apron Holding, Inc. (APRN -3.47%) were moving higher Tuesday after the meal-kit provider delivered a better-than-expected fourth-quarter earnings report despite losing customers in the period. As a result, the stock jumped as much 25.1% Tuesday morning, but was trading up just 2.4% as of 12:31 p.m. EST, as the market reaction moderated.

So what

For the fourth quarter, Blue Apron saw revenue decline 13% to $187.7 million as its customer count fell 15% to 746,000. Still, that revenue result beat estimates at $185.1 million as the company had said it would scale back on marketing expenses as it dealt with operational problems at its new Linden, New Jersey fulfillment facility.

A pork dish from Blue Apron on a plate at a set table.

Image source: Blue Apron.

Gross margin fell 190 basis points to 29.9% due to higher labor costs, though marketing expenses were down 380 basis points to 13.4%. Still, its net loss widened to -$39.1 million, or -$0.20 a share, from -$26.1 million a year ago, but that also beat analyst estimates of -$0.27 per share.

New CEO Brad Dickerson said, "We are methodically implementing operational improvements to drive our business and are encouraged by the progress we've made since last quarter, particularly in margin which contributed to improvement in our bottom-line performance."

Now what

Dickerson noted that the company's net loss improved 55% quarter over quarter, and he expected continuing operational improvements in 2018. He even said the meal-kit service could deliver positive adjusted EBITDA as soon as the fourth quarter of this year, eliciting cheers from investors, and projected that trend would continue into 2019.

Dickerson had previously promised to focus on improving margins, and the stock should move higher if he can execute on that guidance. While the company faces increasing competition from Hello Fresh and supermarket chains, it's too early to write it off as a failure, especially with new management at the helm.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Blue Apron Stock Quote
Blue Apron
$3.19 (-3.47%) $0.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.