After announcing an agreement to transfer its operational infrastructure to FreshRealm, Blue Apron (NYSE: APRN) saw a 25% jump. APRN also announced plans for a long-term operations and logistics relationship with FreshRealm. The $50 million deal will see APRN shift to an asset-light business model in an effort to decrease cash burn, improve capital, and focus on achieving profitability in the long term. So how does the deal impact APRN stock in the long run?
APRN Fundamentals
After the transfer closes on June 9, APRN and FreshRealm are expected to enter into a 10-year production and fulfillment agreement. The agreement will see FreshRealm become the exclusive provider for all production and fulfillment needs associated with the APRN’s meal kit products.
The path to profitability has never been clearer for APRN. The deal will not only increase APRN’s cash on hand. It will also help APRN reduce its expenses immensely, as the company probably could not run its operations infrastructure efficiently due to the lack of scale.
In Q1 2023, product, technology, general, and administrative (PTG&A) expenses totaled more than $35 million of APRN’s $17 million net loss in Q1 2023. The agreement will help APRN cut its PTG&A cost as FreshRealm has the necessary scale to run the production efficiently. With the PTG&A cost cuts APRN would make after the deal, profitability talks may not be far-fetched for APRN as it concentrates more on long-term brand, customer base, and revenue growth.
The license agreement will allow FreshRealm to produce and market prepared meals under the APRN brand to retailers, expanding APRN’s access to new sales channels and helping APRN expand its customer base. Expanding its customer base is crucial for APRN, as it lost 11% of its customers YoY from 367,000 to 326,000, so getting exposure in retail would help APRN mitigate these losses.
A new revenue stream would also be created for APRN through the royalty fees FreshRealm will pay to market and sell products under APRN’s brand name. Furthermore, the $50 million paid to APRN will help clean up its balance sheet, as APRN only has $31 million in cash as of now and has historically suffered from a high cash burn rate.
APRN stock has a 15.6% short interest which makes it prone to a short squeeze, as the stock gained more than 25% after the news of it selling its infrastructure to FreshRealm for $50 million. Considering APRN’s status as a meme stock, it may not be surprising to see the stock continue running as it gains more attention from investors. In this way, short sellers may be forced to cover their positions which might send APRN stock on a major run.
APRN Financials
In its Q1 2023 report, APRN’s assets decreased 7% QoQ from $171 million to $159 million, and its cash and cash equivalents increased almost 6% QoQ from $33 million to $31 million. APRN’s total liabilities decreased almost 8%QoQ from $137 million to $125 million.
Revenue also declined 3% from $117 million to $113 million. Operating losses increased nearly 64% YoY from $39 million to $14 million, which amounted to a net loss of $17 million – a 55% decrease YoY.
Technical Analysis
APRN stock’s trend is neutral with the stock trading in a sideways channel between $0.438 and $0.616. Looking at the indicators the stock is trading below the 21 MA, a bearish indication, and is trading above the 50 and 200 MAs, which are bullish indications, while the MACD is bearish.
As for the fundamentals APRN stock just witnessed a positive catalyst in its $50 million deal with FreshRealm. Another catalyst would be APRN closing the deal on June 9. APRN seems to be on its way to retest the $0.52 support which would be a good entry point before APRN finalizes the deal with FreshRealm on June 9.
APRN Forecast
The $50 million deal with FreshRealm can help APRN solve most of its glaring hurdles. It will help it reduce expenses and cash burn, bringing it closer to profitability. It will also help APRN focus on revenue and customer base growth. With the possibility of a short squeeze occurring as APRN gains interest from investors, APRN stock seems like a stock to watch.
APRN Fundamentals
After the transfer closes on June 9, APRN and FreshRealm are expected to enter into a 10-year production and fulfillment agreement. The agreement will see FreshRealm become the exclusive provider for all production and fulfillment needs associated with the APRN’s meal kit products.
The path to profitability has never been clearer for APRN. The deal will not only increase APRN’s cash on hand. It will also help APRN reduce its expenses immensely, as the company probably could not run its operations infrastructure efficiently due to the lack of scale.
In Q1 2023, product, technology, general, and administrative (PTG&A) expenses totaled more than $35 million of APRN’s $17 million net loss in Q1 2023. The agreement will help APRN cut its PTG&A cost as FreshRealm has the necessary scale to run the production efficiently. With the PTG&A cost cuts APRN would make after the deal, profitability talks may not be far-fetched for APRN as it concentrates more on long-term brand, customer base, and revenue growth.
The license agreement will allow FreshRealm to produce and market prepared meals under the APRN brand to retailers, expanding APRN’s access to new sales channels and helping APRN expand its customer base. Expanding its customer base is crucial for APRN, as it lost 11% of its customers YoY from 367,000 to 326,000, so getting exposure in retail would help APRN mitigate these losses.
A new revenue stream would also be created for APRN through the royalty fees FreshRealm will pay to market and sell products under APRN’s brand name. Furthermore, the $50 million paid to APRN will help clean up its balance sheet, as APRN only has $31 million in cash as of now and has historically suffered from a high cash burn rate.
APRN stock has a 15.6% short interest which makes it prone to a short squeeze, as the stock gained more than 25% after the news of it selling its infrastructure to FreshRealm for $50 million. Considering APRN’s status as a meme stock, it may not be surprising to see the stock continue running as it gains more attention from investors. In this way, short sellers may be forced to cover their positions which might send APRN stock on a major run.
APRN Financials
In its Q1 2023 report, APRN’s assets decreased 7% QoQ from $171 million to $159 million, and its cash and cash equivalents increased almost 6% QoQ from $33 million to $31 million. APRN’s total liabilities decreased almost 8%QoQ from $137 million to $125 million.
Revenue also declined 3% from $117 million to $113 million. Operating losses increased nearly 64% YoY from $39 million to $14 million, which amounted to a net loss of $17 million – a 55% decrease YoY.
Technical Analysis
APRN stock’s trend is neutral with the stock trading in a sideways channel between $0.438 and $0.616. Looking at the indicators the stock is trading below the 21 MA, a bearish indication, and is trading above the 50 and 200 MAs, which are bullish indications, while the MACD is bearish.
As for the fundamentals APRN stock just witnessed a positive catalyst in its $50 million deal with FreshRealm. Another catalyst would be APRN closing the deal on June 9. APRN seems to be on its way to retest the $0.52 support which would be a good entry point before APRN finalizes the deal with FreshRealm on June 9.
APRN Forecast
The $50 million deal with FreshRealm can help APRN solve most of its glaring hurdles. It will help it reduce expenses and cash burn, bringing it closer to profitability. It will also help APRN focus on revenue and customer base growth. With the possibility of a short squeeze occurring as APRN gains interest from investors, APRN stock seems like a stock to watch.