Blue Apron Holdings (NYSE:APRN) may be a Better Hedge Play Amid Covid-19 Crisis

One of the companies that proved to be a major winner during the coronavirus pandemic was meal kit company Blue Apron Holdings, Inc. (NYSE:APRN). Since restaurants had been closed and thousands of people were staying at home, the demand for meal kits soared considerably. That resulted in significant gains in the Blue Apron stock as well.

What to Expect

While it is believed that the demand for the company’s meal kits are going to decline drastically following the opening up of restaurants, it should be remembered that many customers could also stick to the service. Hence, it is important to figure out if the stock can remain strong after the pandemic is over.

In the past, the company had failed to add new customers due to the high churn rate, but the coronavirus pandemic alleviated that problem. Once the pandemic is over and restaurants reopen, the company is almost certain to lose those new customers, but some of those will stay on.

Eventually, that might lead to more growth to word of mouth, and if the company can sustain the growth cycle, then the Blue Apron stock could continue to be strong. The company currently has a market cap of only $150 million, and hence, if Blue Apron manages to be even marginally successful, then the stock could turn out to be a multi-bagger.

As per a survey conducted by NDP, as many as 100 million Americans were willing to try meal kits, but eventually, that number touched only 9 million in 2019. Hence, the market is there, and the coronavirus pandemic nudged those consumers towards finally taking action.

That being said, it should be kept in mind that the industry has a churn rate of as much as 80%, and if Blue Apron can manage to reduce that marginally, then the business could grow. Hence, if the company can add more customers than it loses, then it could manage to stay strong in the near term. Ultimately, the rewards could be enormous for investors considering the price of the stock.

About Travis Garlick 1772 Articles
Been writing about and trading stocks since 2013. Manage a group of micro-cap investors on Facebook with over 15,000 members. Turned $8,500 into 185k the first year I started trading stocks and haven't looked back.