Is the blue apron stock a buy?

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Early 2020, Blue apron‘s (NYSE: APRN) the days seemed numbered. The meal kit maker was seeing double-digit declines in customer base and revenue, remained deeply unprofitable, and faced a growing number of aggressive competitors.

But then the pandemic struck. After dropping for more than two years in a row, Blue Apron’s revenue started to rise again as more people stayed home and ordered meal kits. Investors have noticed these improvements and the company’s shares have stabilized and increased by around 15% in the past 12 months. Could Blue Apron’s dilapidated stock finally be worth repurchasing?

Image source: Getty Images.

The growth of Blue Apron in the era of the pandemic

Blue Apron’s revenue plunged 32% in 2019, but increased 1% to $ 460.6 million in 2020. Its revenue grew 9% year-on-year to $ 253.7 million in the first semester 2021.

This recovery looks promising, but we can also see the tailwinds associated with the pandemic fade if we break down its quarterly results:

Metric

Q1 2020 (year-on-year growth)

Q2 2020 (year-on-year growth)

Q3 2020 (year-on-year growth)

Q4 2020 (year-on-year growth)

Q1 2021 (year-on-year growth)

Q2 2021 (year-on-year growth)

Customers

(32%)

(12%)

(8%)

1%

4%

(5%)

Orders

(29%)

5%

11%

16%

19%

(8%)

Returned

(28%)

ten%

13%

22%

27%

(5%)

YOY = Year after year. Data source: Blue Apron.

We can also see how Blue Apron CEO Linda Findley, who took the helm in April 2019, focused on increasing the company’s total order count to make up for its continued loss of customers. Instead of trying to aggressively grow Blue Apron’s customer base with costly marketing campaigns, Findley initially focused on retaining the platform’s higher value customers.

These cost reduction efforts enabled Blue Apron to reduce its GAAP net loss from $ 61.1 million in 2019 to $ 46.2 million in 2020. It also reduced its adjusted EBITDA loss by 8 , $ 4 million to $ 1.0 million.

But in the first half of 2021, Blue Apron’s net loss widened year over year, from $ 19.0 million to $ 34.3 million. It also posted an Adjusted EBITDA loss of $ 9.6 million, compared to positive Adjusted EBITDA of $ 5.3 million a year ago. He attributed the growing losses to higher logistics costs and food inflation, and expects these spending to stabilize in the second half of the year.

However, Blue Apron also plans to increase its marketing spend again throughout the rest of the year. That’s why he raised $ 21.1 million in cash with a stock offering in June, and then announced another $ 78 million capital increase – which mainly includes warrants to purchase d ‘additional actions over the next seven years – in September.

Blue Apron clearly needs to strengthen its balance sheet. He finished last quarter with $ 51 million in cash and cash equivalents, but had negative free cash flow of $ 13.9 million for the first six months and still insured $ 32.4 million in total debt ( including $ 3.5 million in short-term debt and $ 28.9 million in long-term debt).

Blue Apron Post-Pandemic Advice

Blue Apron could face difficult year-to-year comparisons in the second half of 2021 as tailwinds linked to the pandemic recede. But for the full year, the company still expects to generate “single-digit or low-double-digit” revenue growth with growth picking up in the second half of the year. It also plans to publish its first positive full-year adjusted EBITDA in 2022.

These expectations seem overly optimistic to me, but Blue Apron expects its growth trends throughout the pandemic to continue after the crisis ends, even though it has experienced a one-year “seasonal” slowdown. the other in the second trimester.

A faster growing rival Hello fresh (OTC: HLFF.F) also raised its revenue growth forecast for the full year from 25% to 35% to 35% to 45% in August. This confident forecast appears to support Blue Apron’s bullish expectations.

Is Blue Apron an undervalued stock?

Is the blue apron undervalued? It depends on how things are going.

Analysts expect Blue Apron’s revenue to grow 8% to $ 497.7 million this year. Based on this forecast, its shares are trading at just 0.4 times this year’s sales. By comparison, HelloFresh is trading at 2.3 times this year’s sales.

Last November, I told investors that Blue Apron stock may recover if it continues to stabilize its activity. The stock has grown by around 60% since then, and I think there might still be some room for it to do if it continues to streamline its business, focus on higher value customers, and roll out new products. .

However, investors should probably wait until Blue Apron releases its third quarter results in early November – which should either support or contradict its bullish expectations for the remainder of 2021 – before starting a new position.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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