Blue Apron is Officially a Winner of the Pandemic

That’s a headline I never expected to type. Blue Apron (NYSE: APRN) has been a company that appeared to be on the road to nowhere. However, as the company gets ready to announce earnings on July 29, the tide may be turning.

The company is not yet profitable and this earnings report will do nothing to change that. The consensus estimate has the company posting a per-share loss of 45 cents. That should not be overlooked since Blue Apron posted a loss of $1.08 per share during the same quarter in 2019.

However, there’s a better story. In late April, Blue Apron issued guidance that it would post quarterly revenue of around $130 million. If that number holds it would mark a 9% increase on a year-over-year (YoY) basis. While that doesn’t sound like much, for Blue Apron it’s a big deal.

How big? It would be the first time in two-and-a-half years that the company has not posted double-digit declines in revenue growth. For a company that launched its initial public offering (IPO) to a lot of fanfare in 2017, this is a big deal.

But is it enough to say the stock is a pandemic winner? I think so and let me explain why.

The right model for the wrong time

The problems for Blue Apron started almost right away. Ironically, the same economic environment that propelled them to launch their IPO was a reason for its struggles. That is, with the economy continuing to expand and jobs being added left and right, there was less time for two-income families to set aside time to cook.

And when they had time, the last thing they wanted to do was cook.

Add to that, Blue Apron was having a problem with scalability. But the larger issue was that many people just simply had other prepared food options that didn’t require them to cook.

And even if customers did buy into Blue Apron’s value proposition, other competitors such as Hello Fresh were lower-priced competitors in the space. And when grocery chains like Kroger (NYSE: KR) announced they were getting in the meal kit game, it looked like the gig was up.

The novel coronavirus has changed the paradigm

But then the novel coronavirus struck. Going out to eat was not possible. Trips to the grocery store often left shoppers with an incomplete ingredient list. However, cooking at home seemed like the right thing to do.

And we found out a couple of things. There are many Americans that really, really don’t like to cook. And the ones that do don’t want to plan their meals.

And that created a window that Blue Apron was more than happy to walk through.

Have they won the battle, but will still lose the war

Blue Apron has many problems. It remains to be seen if they will be able to retain the momentum they have garnered during the pandemic. The company is not yet profitable and prior to the pandemic, there was some concern that the company would run out of money before it ever had a chance to turn a profit.

Now, what’s impossible to know at this time is just how much the economy will be permanently changed. Many people who had jobs are now unemployed. Many people who are working from home may continue to work from home. As much as the pandemic has created stress, it’s also created connections and perhaps new rituals.

Are any of these things long-term trends? I don’t know. But while I don’t like the phrase “the new normal’ it applies in this regard. Much like what happened after 9/11, the world will not be the same. There will be changes. And those changes will result in changed behavior. Will one of those behaviors involve pre-packaged meal kits? Maybe. Will Blue Apron be acquired by a company that can help it become an efficient profitable business? Maybe.

So if I were to tell you that Blue Apron was a long-term buy, I would be lying. But as long as the pandemic is changing the way we think about dinner preparation, then there is a catalyst for Blue Apron. Whatever happens during earnings, APRN stock is worthy of your speculation