APRN Stock: Should You Follow the Insiders or Be a Contrarian?

Blue Apron Holdings, Inc. (APRN) is a direct-to-consumer platform that delivers original recipes with fresh and seasonal ingredients. It also operates Blue Apron Market, an e-commerce market that provides cooking tools, utensils, pantry items, and other products.

In addition, the company offers Blue Apron Wine, a direct-to-consumer wine delivery service that sells wines that can be paired with its meals. It serves young couples, families, singles, and empty nesters.

The company failed to surpass consensus EPS and revenue estimates in the last reported quarter. Its loss per share was higher by 5.7%, while its revenue came 0.6% below the consensus estimate.

The company expects third-quarter net revenue between $109 million and $112 million, below Street estimates. The company has also been fighting to remain a going concern. APRN announced the completion of a sale of its Class A common stock for $15 million. The proceeds will be used as working capital and other general corporate purposes.

APRN’s President and CEO Linda Findley said, “We are pleased to have successfully completed this at-the-market equity offering program which provides us with additional capital to move the business forward.”

Insiders have been selling APRN shares. An ownership update from former Director Barry Salzberg shows that he had sold 267,354 shares since his last 13D filing in September 2021. Other insiders have also sold APRN shares. Over the past three months, insiders have not purchased any shares and sold 22,761 shares.

In April, APRN had inked a private placement deal with RJB, an affiliate of Joseph Sanberg, its largest shareholder, for the issue and sale of 3.30 million class A shares for $40 million. In addition, it entered into a gift card sponsorship deal with another affiliate of Sanberg, which promised to pay the firm $20 million as a net sponsorship fee to fund the distribution of gift cards.

In case APRN fails to secure the financing from the above deals, it will be unable to meet the requirements to operate as a going concern.

APRN’s stock has declined 62.1% in price year-to-date and 67.7% over the past year to close the last trading session at $2.55. It is trading 80% below its 52-week high of $12.76, which it hit on December 7, 2021.

Here’s what could influence APRN’s performance in the upcoming months:

Weak Financials

APRN’s total operating expenses increased 7.7% year-over-year to $146.90 million for the second quarter that ended June 30, 2022. The company’s net loss widened 24.4% year-over-year to $23.12 million. Its adjusted EBITDA loss widened 337% year-over-year to $15.50 million. Its loss per share came in at $0.68.

Unfavorable Analyst Estimates

APRN’s EPS for fiscal 2022 and 2023 is expected to remain negative. It failed to surpass Street EPS estimates in each of the trailing four quarters.

Mixed Profitability

APRN’s trailing-12-month net income margin is negative compared to the 4.89% industry average. Its trailing-12-month EBIT margin is negative compared to the 8.90% industry average.

However, its 2.17% trailing-12-month asset turnover ratio is 167% higher than the industry average of 0.81%. Likewise, its trailing-12-month gross profit margin is 33.89%, compared to the 32.63% industry average.

POWR Ratings Reflect Bleak Prospects

APRN has an overall D rating, equating to Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. APRN has a D grade for Sentiment, consistent with its unfavorable analyst estimates.

It has a C grade for Quality, in sync with its mixed profitability.

APRN is ranked #37 out of 63 stocks in the F-rated Internet industry. Click here to access APRN’s ratings for Growth, Value, Momentum, and Stability.

Bottom Line

Insiders are selling APRN shares on concerns over its ability to remain a going concern. Although it completed the $15 million offering of its class A shares, the company still needs additional debt and equity financing to stay afloat.

Given its weak financials and unfavorable analyst estimates, it could be wise to avoid the stock.

How Does Blue Apron Holdings, Inc. (APRN) Stack Up Against Its Peers?

APRN has an overall POWR Rating of D, equating to a Sell rating. Therefore, one might want to consider investing in other Internet stocks with a B (Buy) rating, such as trivago N.V. (TRVG), Yelp Inc. (YELP), and Expedia Group, Inc. (EXPE).

APRN shares were trading at $2.42 per share on Monday afternoon, down $0.13 (-5.10%). Year-to-date, APRN has declined -64.04%, versus a -23.11% rise in the benchmark S&P 500 index during the same period.

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.

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