Perhaps the most surprising name at the top of Tuesday's leaderboard was home meal kit provider Blue Apron (APRN) . Shares rose more than 35%, on the news that the company will add Beyond Meat (BYND) products to its Signature Two-Serving Plan in August, featuring BYND's "Beyond Burger".
It was a seemingly huge day for a company that has not been the beneficiary of much good news lately, as sales have stagnated, not enough consumers have stuck around after discounts (including yours truly), and losses have mounted. However, the 35% pop occurred in the wake of an 80%+ price decline over the past year, as well as June's 1 for 15 reverse stock split. It was a huge move for anyone brave enough to buy shares recently, but a mere blip on a one-year price chart.
Still, you have to give APRN some credit here in getting some bang for the buck in partnering with one of the market's hottest companies. BYND is up nearly 600% since going public in April at $25/share, and in the early going, the company is taking on cult-like status. It looks like plant-based meats are the new black, at least for now, and BYND's market cap has already grown to $10 billion. The company is expected to earn just 5 cents next year, putting the forward price earnings ratio at 3452; seems a "bit" expensive to me, but as a value investor, I am probably the wrong guy to ask.
What we don't know yet is the potential effect that this collaboration will actually have on APRN, and whether the addition of BYND products can drive APRN to profitability. I'm not sure that it can. Yesterday's action seems to be based on hype. Perhaps it will drive more consumers to sign up for a trial with APRN, but the issue is whether it will inspire longer-term customer relationships.
I have nothing against APRN, in fact it was a name I wanted to like, and we were very impressed by the product when we tried it last summer. After the discounts ran out, however, it just did not make economic sense to continue. The model of mailing food in elaborate packaging is one that does not seem financially viable, and may never be able to generate a positive bottom line.
As I've stated previously, APRN's way out may be via acquisition by someone with deeper pockets. That has me wondering whether BYND might be that someone?