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Why Blue Apron Shares Surged Today

By Jeremy Bowman – Updated Apr 18, 2019 at 10:29PM

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The stock of the meal-kit provider jumped after it said it would be profitable on an adjusted EBITDA basis.

What happened

Shares of Blue Apron (APRN -7.83%) were soaring today after the meal-kit provider reaffirmed expectations that it would post an adjusted EBITDA profit for both the first quarter of 2019 and the full year. In a press release, Blue Apron also highlighted some of the other initiatives the company is taking.  As of 10:58 a.m. EST on Tuesday, shares were up 27.7% on the news.

So what 

Management said earlier that it expected to deliver positive adjusted EBITDA in 2019, but this is the first time the company has given that forecast for the first quarter, which is historically the strongest season for the meal-kit service. That news assured investors that Blue Apron's bottom line is headed in the right direction after a woeful 2018.

A collection of Blue Apron meal kit ingredients

Image source: Blue Apron.

In its announcement, Blue Apron said that its new partnership with Weight Watchers has experienced "higher-than-expected demand to date."  And when it reports fourth-quarter earnings on Jan. 31, it plans to provide updates on its new partnership with and its strategy to focus on its highest-value customers.

Now what 

After Blue Apron stock lost 75% in 2018, investors are eager for any good news, and heading for adjusted EBITDA profitability is certainly a good sign. Still, it's worth remembering that positive adjusted EBITDA is not the same thing as positive free cash flow or positive operating income, and it's a long way from a GAAP profit. 

But with Blue Apron stock beaten down so low, it won't take much to lift its shares from here, as its market cap is just $256 million even after today's gains. We'll learn more when the company reports earnings at the end of the month. If fourth-quarter results beat estimates, expect another surge.

Check out the latest Blue Apron earnings call transcript.

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.

Stocks Mentioned

Blue Apron Stock Quote
Blue Apron
$0.70 (-7.83%) $0.06

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