IB Net Payout Yields Model

Blue Apron: Oprah Momemt

Blue Apron (APRN) has soared above $1 following news that the company has a partnership with Weight Watchers International (WTW). The move makes one wonder whether the partnership will lead to Oprah Winfrey pushing Blue Apron products. If so, investors can only dream of the same boost provided to Weight Watchers following their deal with Oprah. Beginning on October 1, 2015, the stock surged over 1,500% in the next 3 years.

No indication exists that Oprah will be involved in pushing the Blue Apron products, but the stock is obviously ripe for a rally on any improving business prospects. The CEO even went as far to tell the WSJ that the deal would stabilize customers counts and turn the company profitable next year. For a company with a $200 million market and revenue over $600 million, the stock might just rally with or without Oprah.

Blue Apron is a high risk at this point, but basically an option play that could pay off.

1/15/19 Update

The company forecasts that Q1 and all of 2019 will be EBITDA positive. The company lost $18.8 million in Q3 so Blue Apron has to generate substantial improvements in EBITDA in the matter of 2 quarters to achieve this goal.

The biggest issue is that the company is only going to be modestly EBITDA positive. The company doesn't have any interest charges so being EBITDA positive is a relatively clear number outside of about $8.5 million in quarterly depreciation and amortization costs. These depreciation charges are likely due to fulfillment facilities that don't need to be expanded at this point.

Blue Apron is definitely making positive moves to improve the business. The value of the stock remains in question without some meaningful catalyst.

Disclosure: No position mentioned. Please review the disclaimer page for more details. 


Jennifer said…
very good information

Popular posts from this blog

Aurora Cannabis: Deal Or No Deal

C3.ai: Out Of Steam (Rating Downgrade)

Archer Aviation: Promising Developments