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Why Blue Apron Holdings Inc. Popped Today

By Jeremy Bowman – Apr 16, 2018 at 11:42AM

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Shares of the meal-kit provider gained today as short sellers seem to close out their bets.

What happened

Shares of Blue Apron Holdings Inc. (APRN -10.47%) were moving higher today on an apparent short squeeze. Though there was no news out on the meal-kit provider, the stock was climbing on high volume as short sellers seemed to be moving in to close out their trades after the stock had plummeted sharply last month.  

As of 12:03 p.m. EDT, the stock was up 7.6%.

A Blue Apron meal with chicken thighs in a bed of tomatoes and beans

Image source: Blue Apron.

So what 

By noon, more than 3.4 million Blue Apron shares already had been exchanged, slightly more than the daily average of 3.36 million. That sort of high-volume surge on a stock like Blue Apron with no supporting news usually signals a short squeeze.

After debuting at $10 last June, the stock touched an all-time low at $1.72 earlier this month as increasing competition and slowing revenue growth have contributed to investor skepticism about the stock. Revenue even fell in its most recent earnings report. However, the company's first-quarter earnings report, which is just around the corner on May 3, presents a potential catalyst for Blue Apron's recovery.

Now what

For bulls hoping for a comeback, I wouldn't read too much into the stock's jump today. Shares have been volatile and will continue to be, as the stock operates in a young industry with an unproven business model. Blue Apron could still possibly turn around its business as new CEO Brad Dickerson is committed to improving margins, or the company could get acquired. However, competition from the likes of Walmart may only squeeze the company further.  

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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