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Oct 17, 2017

S3 Analytics: Short Sellers seeing the Green in Blue Apron

Despite shares of Blue Apron (APRN US) already losing close to half of its market value since going public, bearish speculators continue to target the meal-kit delivery service as a popular short play.  Short sellers have a paper profit of $24.9 million since the initial offering, yielding a positive 33.25% return on investment, net of financing fees.  This would outpace the performance of the NASDAQ, and more than double the S&P year-to-date.    

S3 Partners measures real dollars at risk on the short side to be $69.3 million currently, up from $62.3 at the end of September, a 12% increase since the calendar flipped to October.  Borrow rates have spiked on the back of this surge in demand, as new supply is now trading in the 16% range, double the cost where it was being lent to shorts just a week ago. 

Short interest was actually trending down when measured on a shares shorted and dollars at risk basis for both August and September.  Shares sold short dropped by 22.1% (to 11.43 million from 14.67 million) and dollars at risk had dropped by 35.8% (to $62.3 million from $96.99 million) during this two month time frame as bears looked to realize gains. 

HelloFresh, a direct competitor of Blue Apron that plans to go public in Germany soon, recently predicted that it is on pace to overtake its US rival later this year.  Throw in the deals made by Albertsons (acquiring Plated) and Amazon (acquiring Whole Foods) and the intense competition for the grocery industry is “heating” up.   One wonders if a similar take-over scenario may need to play out for Blue Apron for the stock price to re-visit its high. 

Want deeper insight into the above analysis? Contact:
Director, S3 Partners
The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC ('S3 Partners') to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decision.

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