PreMarket Prep Stock Of The Day: Blue Apron

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

Throughout the coronavirus (COVID-19) crisis, there have been issues that have benefitted from the "stay-at-home" policies implemented by several state governments. Amazon.com AMZN and, Walmart WMT have surged to all-time highs on the premise that with restaurants idled, consumers will resort to good old fashioned home cooking and purchase the supplies needed from these retailers.

One issue in the home delivery meal service industry, Blue Apron APRN, initially caught a strong bid off that premise, but it turns out the proof is in the pudding. With its disappointing first-quarter results, the issue is deep in the red in today's session, making it the PreMarket Prep Stock Of The Day.

A Dud From The Start

With much fanfare, Blue Apron went public in June 2017, just as the IPO market was heating up. It opened at a reverse-split adjusted price of $150, reached $165 later that month and went straight south.

After declining 94% from its IPO price by June 2019, the company engineered a reverse split (1 for 15) in attempt to breathe some life into the faltering issue. It did provide a temporary bit of relief as in July, it rallied from the monthly low in June ($6.10) to a July high of $13.65, but fell back to end the month at $8.78. It held in that area until August, but drifted lower to end the year at $6.58.

While the broad market went higher in the first fews months of 2020, the issue went in the opposite direction. The stock imploded along with the market, not finding a bottom until it put in a pair of lows at the $2 area on Feb. 25 ($2.02) and March 9 ($2.02).

Short Squeeze Extraordinaire

With short sellers content riding the issue to $0, all of a sudden Blue Apron was anointed the king of stay-at-home stocks. Once the issue leaped from $2.28 to $3.82 on much higher than average volume, the momentum and algorithmic traders took over, pushing the issue to $28.84 on March 19; It retreated to end the session at $14.34.

As often in these types of run-ups, when the volume begins to fade, so does the share price. As trapped buyers attempted to exit the issue, it declined to $10.57, although managed to end Tuesday's session at $12.55.

Does Not Deliver In Q1

Before today's open, the company announced a first-quarter EPS miss of a penny and a sales miss of $5.5 million. Its mixed shelf offering of $75 million, which will have a dilutive effect on its share price, is putting additional selling pressure on the issue. As of 11:30 a.m. EST, Blue Apron's stock was lower by $2.70, or 21%, at $9.86 per share.

Based on the long-term trend in the issue coupled with the fact that it has crashed and burned during a period when some investors thought it may outperform, it's doubtful the company has the ingredients for a sustained recovery in its share price.