Blue Apron Holdings Inc. (NYSE: APRN) saw such an incredible jump in its shares on Thursday that some investors might expect either a takeover of the company or that a full-blown turnaround was in the air. It turns out that the driving force behind the rally is Blue Apron featuring plant-based proteins from Beyond Meat Inc. (NYSE: BYND) in meal kits starting in August.
While this is not bad news at all, and while it is even good news on the surface, the movement in the shares may have some mechanical effects that are taking it above and beyond what might be expected from fundamental investors. That said, Blue Apron’s shares did rise substantially after a partnership was announced with Weight Watchers.
Blue Apron x Beyond Meat recipes will be included on Blue Apron’s signature Two-Serving Plan starting in August. They are specially crafted by the Blue Apron culinary team featuring the Beyond Burger. Customers already can begin placing orders for the new August recipes through Blue Apron’s website and mobile app.
Blue Apron has had to do many things to rekindle and keep the interest of investors. With the help of better-suited leadership, Blue Apron has even had to resort to a reverse stock split to avoid any delisting risk ahead. Most investors tend to view reverse stock splits as a sign of weakness, with more risks in the future, rather than viewing them favorable similar to traditional stock splits of the past.
Another mechanical issue around Blue Apron, despite the one-for-15 reverse split in mid-June, is that it remains heavily shorted. That last short interest was 1.767 million shares. Blue Apron would still be considered a penny stock without its reverse split that took effect on June 17.
Blue Apron will not release second-quarter results until the first week in August, and analysts care calling for revenues of $138.1 million, according to Refinitiv. It is still expected to post a loss of about $1.08 per share for the quarter. Its March quarter revenue was $141.9 million, and its revenues in the June quarter of 2018 were $179.5 million.
Perhaps the biggest question to ask is whether this halo-effect on the shares should be and whether the move is a “Beyond Meat” boost or just a changing trend within non-meat proteins. The veggie burgers and meatless protein products space is racking up competition fast, and there have been bean burgers and other veggie burgers on the market for more than two decades now.
After closing at $7.66 on Monday, Blue Apron shares were magically up 52% at $11.60 on Tuesday, and more than 11 million shares had traded hands as of about 12:30 p.m. on Tuesday. The split-adjusted 52-week trading range is $6.10 to $55.95, and its current market cap is $153 million.
Shares of Beyond Meat were last seen up 2.7% at $171.13 on Tuesday morning, with a market cap of $10.3 billion and a post-IPO trading range in 2019 of $45.00 to $201.88.
Linda Kozlowski, chief executive officer of Blue Apron, said with the news:
We know a growing number of customers are interested in plant-based proteins, whether as an alternative to meat, a desire to explore a new ingredient, or an opportunity to make more sustainable food choices. We are proud to introduce Beyond Meat products to our menu, beginning with its flagship Beyond Burger. Blue Apron recipes are designed to evoke a sense of discovery and, as a meal kit partner, we have a unique opportunity to teach our customers how to cook a wide variety of cuisines with plant-based protein.
Ethan Brown, Beyond Meat founder and CEO, said:
We’re thrilled to partner with Blue Apron to empower consumers to prepare and enjoy delicious Beyond Burgers at home. The Beyond Burger delivers the delicious taste, texture, and juiciness of a beef burger but comes with the added nutritional and environmental benefits of consuming plant-based meat.