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Why Blue Apron Holdings Stock Climbed 37.3% in January

Keith Noonan, The Motley Fool

What happened

Shares of Blue Apron Holdings (NYSE: APRN) gained 37.3% in January, according to data from S&P Global Market Intelligence. The stock rose mid-month after management gave some encouraging guidance for 2019. 

APRN Chart

APRN data by YCharts.

The company published a press release on Jan. 15 reaffirming its targets for the fourth quarter ahead of its Jan. 31 earnings release, promising encouraging updates on its partnerships with WW (formerly Weight Watchers) and Walmart's Jet.com, and indicating that it expected to be profitable in both the first quarter and full period of 2019. 

A Blue Apron meal of roasted vegetables and fish

Image source: Getty Images.

So what

Performance for the fourth quarter arrived in line with the company's guidance. Blue Apron's revenue declined 25% year over year to land at $140.7 million, and its net loss narrowed to $23.7 million -- improving from a loss of $39.1 million in the prior-year quarter. During the company's earnings call, management expanded on its plan to get the business to profitability on an adjusted EBITDA basis in 2019. 

The company aims to improve sales and earnings performance through partnerships with WW (formerly Weight Watchers) and Walmart's Jet.com. Management expects that these partnerships will help the company solve its membership problem by tapping into complimentary customer bases, diversifying its offerings and sales channels, and reducing the need for big spending on advertising and other aspects of customer acquisition. 

Now what

Blue Apron went public in June 2017 at roughly $10 per share, but a declining customer base and mounting losses have dragged the stock lower and cast a cloud over the company's future. Prior to the January stock bump, Blue Apron shares were trading below the $1 range -- which put them in danger of being de-listed from the New York Stock Exchange unless the company performed a reverse stock split.

Shares have held onto their big January gains and now trade in the $1.40 range, but questions remain about whether the company's business model is sustainable. As more competitors have entered the meals-as-a-service space and some of the novelty of the product category seems to have worn off, Blue Apron's performance has sagged, and its not clear that the company's guidance for being adjusted EBITDA positive this year suggests the business has turned a corner.  

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.