Blue Apron (NYSE:APRN) finally has some good news to report. After a difficult week and an even more difficult month, the meal-kit producer has secured a significant cash infusion. The combination of a new capital investment and refinancing maneuvers have flushed the company with $70.5 million in new capital. APRN stock has been rising all day on the news as the company eyes new opportunities.
What’s Happening With APRN Stock
Since news of the capital infusion broke this morning, Blue Apron has been in the green. As of this writing, APRN stock is up more than 29% for the day. Today’s market performance has been fairly turbulent, but APRN has remained in the green through it all.
Why It Matters
Today’s good news consists of three elements. Firstly, longtime investor RJB Partners has decided to commit $40 million at $12 per share. Blue Apron has already received $20 million, and the second half will come in the year’s second quarter. Secondly, CEO Lind Finely is making an investment of $500,000 at $12 per share. And thirdly, the company has confirmed plans to refinance $30 million worth of debt with Allianz Global Investors.
Blue Apron has been slipping since it passed $12 per share in early December 2021. While APRN stock began slipping after that, it received a boost in late January after Citron issued a highly bullish report and $40 price target. While shares haven’t shot up that far yet, this new capital infusion may be exactly what it needs to begin a turnaround. As InvestorPlace Assistant News Writer Shrey Dua reported, Citron’s bullish take was driven by Blue Apron’s strong fundamentals paired with the rising cost of food.
The company’s fundamentals haven’t shifted since the report was issued. And collective food prices have reached their highest point in decades and are not expected to slow down anytime soon. The United States Department of Agriculture (USDA) predicts that food prices will continue to rise. This supports Citron’s argument that rising grocery costs will continue to drive demand for meal-kit companies. Some experts expressed concern that the end of the Covid-19 pandemic would spell the end of growth for food-delivery companies that boomed in its heyday. But thanks to rising food costs, companies like Blue Apron are still well-positioned to keep rising.
What It Means
The new cash infusion is exactly what Blue Apron needs to scale operations and drive APRN stock up. Demand is only rising, and Blue Apron is maneuvering to do what it takes to meet it. It still operates in a market that is not oversaturated, giving it time to establish itself as the dominant company within the space. The market is ripe for one name to emerge as the brand that Americans turn to for their meal-prep and food-delivery needs. And now Blue Apron has the cash to do exactly that.
Investors may be weary of the company, which has come down significantly since its 2017 initial public offering (IPO). However, that was before the Covid-19 pandemic and, later, rising food costs created an industry landscape that was ideal for food-delivery companies. This news makes APRN stock a name to watch before it shoots up even more.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
