What happened

Shares of Blue Apron (NYSE:APRN), the meal kit service that turned into a busted IPO, have been making an incredible rally in recent days, as demand for its meal kits seems to be climbing while there's been a run on food at grocery stores across the country. That also seemed to lead to a short squeeze; close to 50% of the stock was bet against as of the end of February.

From its closing price last Friday to its peak, the stock jumped a whopping 1,164%. Today, it had gained as much as 77% this morning...before crashing. As of 2:15 p.m. EDT, the stock was down 20.6%.

A number of ingredients in a Blue Apron box.

Image source: Blue Apron.

So what

There is at least one piece of evidence that Blue Apron has seen a spike in demand. Yesterday, the company tweeted that it was hiring for temporary and permanent positions at its Linden, New Jersey, and Richmond, California, facilities.

Both locations are in parts of the country that have been hit hard by the coronavirus epidemic, so based on the message and the fact that the company is looking for temp employees, it does appear to be receiving greater demand than usual.

Families, of course, are stuck at home, and many have more free time than usual. A Blue Apron meal eliminates the need to go grocery shopping and gives customers the satisfaction of cooking their own healthy meal, making it a unique value proposition during a time when a lot of Americans are in lockdown-style conditions.

Now what

Today, the rally in Blue Apron, which had turned parabolic and was likely driven by speculators, seemed to come to an end. A 12-times gain in less than a week is staggering in any kind of market, especially during a crash, and stocks that seem well adapted to the current crisis have periodically soared in recent weeks. However, the extent of the increase in demand for Blue Apron's products is unclear, and many of its new customers might not stick with the service once things return to normal. The company has struggled with customer retention in the past.

Investors should expect the volatility to continue; speculators could pump the stock back up again, especially if there's more good news.