Beyond Meat Can’t Save Blue Apron From Bankruptcy
Grant Davis |
News broke last week Blue Apron (APRN) will now partner up with Beyond Meat (BYND) to put its burgers in APRN’s meal kits.
Short-sellers covered their positions quickly and sent shares of APRN up as high as 66% before closing up 36%.
Mike and I (Peter) shake our heads in embarrasment. The market continues to make the same mistake over and over.
MightyTrades readers have seen this show playout with Blue Apron (APRN) twice before.
Blue Apron’s partnership with Costco failed in six months. Its partnership with Weight Watchers hasn’t been mentioned once since the original press release. (Investors sent shares up 44% on the news.)
But MightyTrades readers know better…
First, let’s ask ourselves what this deal actually does for APRN. Blue Apron is just adding Beyond Meat’s burgers into its kits (starting mid-August. It reports earnings August 6th.)
Blue Apron is losing customers. It’s cutting marketing expenses. It loses money. It’s got hundreds, if not thousands, of competitors. Many more entering the delivery market each day.
Some reports show APRN loses 72% of its customers within the first six months. (We think that number is much higher.) Average orders are around 4 – so roughly four months time.
Do Beyond Meat burgers somehow make customers loyal to APRN? Doubtful. Especially if Beyond Meat is partnering with every company in every industry.
Does Beyond Meat change APRN’s profitability? No. It loses money on every customer it acquires (making it one of our stocks guaranteed to lose you money.) APRN committed to cutting back marketing… the only fuel it has left.
If Blue Apron couldn’t add subscribers after partnering with Weight Watchers (which has 3 million U.S. customers) or Costco (with 94 million paying customers)… what does Beyond Meat offer?
This was just a marketing ploy to get the shares to rally heading into its dreadful earnings coming up early August.
The market has already sold off 24% from its intra-day high. It’s down another 6% premarket (as we write). What does that tell you?
There’s nothing stopping it from going bankrupt.
Our advice remains the same: Short Blue Apron down to $6.80