For a long time, essentially everyone on Wall Street wrote off Blue Apron (NASDAQ:APRN) stock as a dead duck with zero chance of turning around. APRN stock went public at $10 per share in June 2017. That was about as high as it ever got. Over the next 18 months, it turned into what one of the worst IPOs ever. By Christmas 2018, this was a 65-cent stock.

Then the turnaround started.

Macroeconomic sentiment improved. That helped things. But Blue Apron also announced a big meal-kit partnership with Weight Watchers (NYSE:WTW), which management said would stabilize the customer base without the company having to spend big on marketing. Then, the company updated investors on fourth-quarter trends — and that was a positive read. Management said that a new fulfillment center continues to drive operational efficiencies, while the Weight Watchers deal has seen higher-than-expected demand. It also reiterated that the company would be adjusted EBITDA profitable in Q1 and fiscal 2019.

All those positive developments have created a surge in APRN stock. After bottoming at 65 cents before Christmas, APRN stock has nearly tripled in less than a month. Shares currently trade hands at around $1.50.

Is this turnaround legit? Could APRN stock be in the early stages of a huge turnaround that propels shares back to $10?

I don’t think so. There are reasons to be optimistic, and the recent near tripling in APRN stock does feel somewhat justified. But the long term fundamentals remain uncertain, and the pathway to sustainable profitability remains bleak. So, while APRN stock could be in the early stages of a huge turnaround, the odds of this stock getting back to $10 are very, very low.

Reason for Optimism, but Still Too Many Question Marks

There are certainly reasons to be optimistic about the current turnaround in APRN stock.

At its core, the decline in APRN stock over the past 18 months has been driven by three headwinds: customer churn, big expenses and lack of a sustainable moat. To some extent, the recent partnership with Weight Watchers addresses all three of those headwinds.

On the customer churn front, a partnership with Weight Watchers taps into the huge WW customer base and, thereby, gives Blue Apron a pipeline to stabilize customers. Meanwhile, that customer stabilization will come without additional marketing since its through the Weight Watchers pipeline, so the customer base has the potential to stabilize without operating expenses going up. Also, this partnership gives Blue Apron some semblance of a moat, as it establishes the company as a “diet meal kit maker,” which is a unique and differentiated value prop in the largely uniform meal kit space.

Thus, management coming forth and saying that the Weight Watchers deal is progressing with high demand, and concurrently doubling down on profitability projections for 2019, is pretty important. The implication is that this company could be gradually turning into a small, profitable shell of its former self.

But there’s sill too many question marks to say that this transformation is actually what is happening.

Top-line trends at Blue Apron hardly signal a turnaround in sight. Revenue declines have only deteriorated year-to-date — from down 20% in Q1, to down 25% in Q2, to down 28% in Q3. Same is true for customer churn trends. As the company has stopped spending an arm and a leg on marketing, the customer base has consistently dropped by 20% or more each quarter this year. Plus, competition is only getting stiffer and, if the WW partnership doesn’t pan out, the company could continue to lose customers at a rapid pace.

Overall, while there’s reason for optimism regarding APRN stock, there’s also reason to question the legitimacy of recent strength in the stock. Until those questions have tangible answers, it’s probably best to avoid APRN stock.

Profitability Lacks Visibility

The biggest problem with APRN stock is that the company’s pathway to profitability lacks visibility.

Gross margins have been steadily improving all year long. Still, they are largely below 35%. Best case scenario, the company continues to drive operational efficiencies through the Linden fulfillment center, and gross margins rise to 40%.

That still isn’t high enough to drive profitability. Year to date, the company’s opex rate is above 50%. Although the company is cutting back on marketing expenses, that is adversely impacting customer growth — and revenues are dropping too. Thus, there hasn’t been any room for opex leverage, nor will there be so long as the customer base continues to retreat.

In order for Blue Apron to reach true profitability, a lot of things have to happen. First, the customer base has to stabilize and/or grow. Second, that has to lead to revenue stabilization and/or growth. Third, gross margins have to move towards 40% or higher. Fourth, the company has to keep gutting its marketing expenses, potentially to levels that aren’t even possible given current revenues.

In other words, Blue Apron is still a lot of speculative twists and turns away from being truly profitable. Until that pathway attains visibility, APRN stock will likely remain depressed.

Bottom Line on APRN Stock

Recent strength in APRN stock is impressive and should not be ignored. Blue Apron’s fundamentals are improving, and those improvements do breathe life into what was a dying company.

But Blue Apron still has significant operational risks which threaten the long-term sustainability of the company, while the pathway to profitability remains unclear. All together, that means APRN stock won’t head back towards $10 any time soon.

As of this writing, Luke Lango was long WTW.