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Why Blue Apron Stock Popped Today

By Jeremy Bowman - Updated Nov 1, 2019 at 5:13PM

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A possible short squeeze may have lifted the stock.

What happened

Shares of Blue Apron (APRN 3.87%) jumped today, a surprising move that came the day after the company turned in its third-quarter earnings report. Though the results were worse than expected, the stock climbed throughout Friday's session, perhaps on a short squeeze or as investors looked more favorably at the stock's turnaround potential. The stock closed up 16.2%.

A chef holding a Blue Apron dish

Image source: Blue Apron.

So what 

For the quarter past, the meal-kit provider said revenue fell 34% to $99.5 million, missing estimates at $107 million by a wide margin, though management attributed the revenue decline to a strategic pullback in marketing as the company seeks to focus on its highest-value customers.

As a percentage of revenue, marketing spending fell from 15.4% to 12.2%, and declined by nearly half in dollar terms. Customer count also fell by 40% from 646,000 to 386,000, though that also seemed to be consistent with the company's strategy.

On the bottom line, it narrowed its loss per share from $2.64 in the quarter a year ago to $1.99, which was essentially in line with estimates at $1.98. 

CEO Linda Kozlowski said: "We delivered third-quarter results in line with our guidance as we continue to focus on building for the future and managing the business for sustainable, long-term growth. We're pleased to see the continued strengthening of our customer base with year-over-year improvements in certain key customer metrics in the third quarter."

Now what 

Shares swung wildly on the report Thursday, but ended essentially unchanged. Short sellers are keeping an eye on Blue Apron's updates as the stock is heavily bet against with 28% of the stock sold short. That could have led to a short squeeze today as short-sellers will want to get out before the stock shows signs of turning around. Often, a short squeeze can evolve simply out of momentum, which may have been the case today.

Blue Apron's turnaround doesn't seem imminent, but the company did call for revenue to return to year-over-year growth in the second half of next year. Considering that sales are falling by 34%, that seems like a long time to wait.

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