Why Blue Apron Holding Inc. Stock Popped Today

Markets Motley Fool

What happened

Continue Reading Below

Shares of Blue Apron Holding Inc. (NYSE: APRN) were gaining today after Guggenheim Securities initiated coverage on the meal-kit provider with a "buy" rating and a price target of $9. 

Analyst Matt DiFrisco cited strong leadership at the company and noted that Blue Apron is the leader in an industry he projects will grow by 25% a year over the next three years. As a result of the bullish prediction, the stock finished up 6.5%.

So what

It was a contrarian call for a company that has been battered in its short time on the public markets and has nearly 50% of its float sold short. Blue Apron, however, does have supporters on Wall Street. DiFrisco said he expects the company to maintain its leadership of the industry, noting that it controls about 20% of the market. He also projected the company's sales to double from about $800 million last year to $1.6 billion by 2020. 

Now what

Continue Reading Below

The recent IPO got another reprieve of sorts when Albertson's said it would buy Plated, Blue Apron's smaller rival, last week for an undisclosed amount. The move shows continuing interest in the sector, which is likely to see consolidation as smaller players either get acquired or go out of business.

Blue Apron's first report as a publicly traded company was underwhelming as its loss was wider than expected and revenue growth slowed to 18%, but it was unclear if that was because of falling demand or logistical problems with a new facility that should be soon corrected.

The stock has only been public for three months now, and debate continues to rage over its future as well as the broader meal-kit sector. Expect continued volatility as investors sort out the company's prospects.

10 stocks we like better than Blue Apron
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Blue Apron wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of September 5, 2017

Jeremy Bowman 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.