Blue Apron Holdings Inc (APRN) Stock Will Poison Bottom-Fishers

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APRN - Blue Apron Holdings Inc (APRN) Stock Will Poison Bottom-Fishers

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Put your rods and reels away. Beaten-up online meal-kit company Blue Apron Holdings Inc (NYSE:APRN) stock has found new life since Monday after Jana Partners — an activist hedge fund with a rich history in the grocery space — disclosed a $5.6 million position in APRN stock as of the end of June.

Blue Apron Holdings Inc (APRN) Stock Will Poison Bottom-Fishers

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That sent Blue Apron shares up by about 5% on Monday, and another 1% yesterday, luring a few bottom-fishers out of their homes.

But the story is a bit more complicated than that, and not nearly as bullish.

Jana Partners is also famous for its activist stake in Whole Foods Market, Inc. (NASDAQ:WFM). They were essentially the ones who pushed for Whole Foods to sell itself. When Whole Foods did finally agree to buyout terms with Amazon.com, Inc. (NASDAQ:AMZN), Jana Partners netted a cool $300 million.

Something else also happened when Amazon acquired Whole Foods. The fanfare surrounding the upcoming initial public offering of Blue Apron suddenly faded.

Early on in the IPO process, Blue Apron quoted $15 to $17 a share as the target offering price range. By the time the IPO rolled around, institutional investor enthusiasm had died down, and APRN stock went public at just $10. Since then, Amazon-related concerns — including a trademark filing for its own meal-kit service — have continued to weigh on the stock, which is down about 50% from its $10 offering price.

It’s interesting to see that the activist hedge fund that practically jump-started Blue Apron’s demise now take a position in the stock. What does it mean?

Jana Partners’ Position

Well, not that much at all.

Its unclear whether Jana still holds this position or not. The filing was at the end of June, and a lot has happened with APRN stock since then. According to CNBC, if Jana did hold its entire position, it would be worth about $3.2 million today, a loss of greater than 40%.

Considering the amount of hedge funds that have been dumping Snap Inc (NYSE:SNAP) amid its own post-IPO struggles, it isn’t unlikely that hedgies are doing the same thing with APRN stock. It is especially interesting to note that one of the larger hedge funds to buy SNAP last quarter and sell it this quarter was none other than Jana Partners.

In other words, it wouldn’t be out of character for Jana to snap up a stock around its IPO, only to dissolve the position a short time later.

And the similarities between Snap and Blue Apron are myriad. Both stocks were decimated since their IPO, in the wake of disappointing earnings and significant threats from much larger, better-financed competitors.

Jana Partners also was plenty vocal about its intentions for Whole Foods when it established and increased its position. According to Bloomberg, however, “A representative of Jana declined to comment on the (APRN) holding.”

This makes it seem all the likelier that Jana has exited its position already. But even if it didn’t, this is a relatively small position. At $5.6 million as of the end of June, Jana’s APRN stock stake pales in comparison to the $980 million position it held in WFM before cashing out last month with a $300 million profit, or the $522 million position held in Tiffany & Co. (NYSE:TIF).

In fact, the Blue Apron position is one of Jana’s smallest positions in its whole portfolio.

Bottom Line on APRN Stock

The recent bump in Blue Apron is just meaningless bottom-fishing by bulls clinging on to any optimism they find.

Jana Partners’ stake is insignificant, and possibly already nonexistent, much like what happened with Snap. Consequently, anyone jumping into APRN because of the Jana Partners connection is really making a leap.

Blue Apron already faces serious existential risk just months after its public offering. Not to mention, there’s still profitability issues and a full valuation, not to mention an eventual lockup expiration to face.

There’s no reason to bite here.

As of this writing, Luke Lango was long AMZN.


Article printed from InvestorPlace Media, https://investorplace.com/2017/08/blue-apron-holdings-inc-aprn-stock-will-poison-bottom-fishers/.

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