Yesterday, Turnaround Letter-recommended Blue Apron Holdings (APRN) announced that it will report earnings and provide an update on its strategic initiatives on January 31, 2019. More importantly, the company said it will re-affirm its confidence in achieving positive EBITDA in the first quarter of 2019 and for full-year 2019. The healthy initial results of Blue Apron’s partnership with WW, the former Weight Watchers, are contributing to management’s optimism.
Blue Apron shares gained as much as 35% in the still-underway trading session today.
With analysts currently estimating that the company will post marginally positive first quarter EBITDA but produce a $10 million EBITDA loss for the year, Blue Apron’s announcement is a meaningfully positive surprise. Achieving positive EBITDA for the year indicates that the company is on a path toward sustainability rather than inevitable decline. A skeptical stock market isn’t expecting this outcome. The news will not only attract new buyers of APRN shares, but force short-sellers (who have collectively shorted over 7% of APRN shares) to scramble to buy.
The company’s management is putting their credibility on the line. If they don’t produce the re-affirmed results, it would be difficult to see their continuing to run the company. However, if they are able to deliver, Blue Apron’s future could be much brighter.
We continue to rate Blue Apron Holdings (APRN) shares a Buy up to 2.
Disclosure: An employee of the Publisher owns APRN shares.