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APRN stock alert: why Citron thinks the blue apron can be multiplied by 4

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After a rollercoaster Q4 for a meal kit company blue apron (NYSE:APRN), the outlook is up for the company. APRN stock is up more than 3% as market close nears after Lemon gave the direct-to-consumer business a strong buy rating.

Source: Roman Tiraspolsky / Shutterstock.com

What’s behind Citron’s latest plea report?

Citron puts no effort into their presentation backing their huge price target of $40. The research firm says the food industry has the potential to beat the metaverse, crypto, and electric vehicles (EVs). They even quote a lofty tweet from investor Joe Sanberg about the food service company: “Blue Apron is going to turn out to be one of greatest business turnaround stories of this century!”

The basis of their optimism? Solid fundamentals and rising food prices. According to Citron, the benefits of going to the supermarket for food “make less and less sense”. A recent KPMG food cost survey backs up his claim. Apparently, about 61% of respondents intend to use meal kits more often in 2022. This comes as grocery costs are expected to rise nearly 15% this year.

To add to the consumer trend, Blue Apron often tops many meal kit reviews in terms of quality, price, and ease of use.

This isn’t the only logic behind Citron’s prediction, however.

Citron Says APRN Stock Is Grossly Undervalued

After opening at $140 in 2017, Blue Apron has seen its stock price gradually decline. APRN has fallen as low as $3.52 per share, and even after a strong performance today, it’s only down to $7.90. As such, “bullish” barely sums up Lemon’s $40 price target.

Citron says that compared to other equally popular meal kit services, Blue Apron’s market capitalization falls far short of its potential. For example, industry leader HelloFresh (OTCMKTS:HLFF) is valued at over $10 billion, compared to $160 million for APRN. Citron argues that Blue Apron enjoys higher margins and increased customer usage than HelloFresh.

Additionally, Citron believes that its recent leadership changes reflect a complete restructuring of the company’s business model, for the better.

“Blue Apron was unable to grow proportionately during the pandemic because previous management failed the business as they focused more on building infrastructure and not focusing on acquisition costs of customers. This left them with little money for 2020. All that has changed and the terms are significant.

Citron’s report caused an immediate jump for meal service. Notably, the company is still trading below last month’s high of $12.80. It remains to be seen whether the APRN will reach the levels predicted by Citron.

As of the date of publication, Shrey Dua does not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.



APRN stock alert: why Citron thinks the blue apron can be multiplied by 4

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