Blue Apron Holdings, Inc. (APRN) shares rose more than 3% during Thursday's session after the company released its third quarter financial results before the market open. Third quarter revenue fell 33.9% to $99.49 million, missing consensus estimates by $7.43 million, while GAAP net losses per share came in at $1.99, missing consensus estimates by one cent. Despite the significant drop in sales, adjusted EBITDA losses narrowed to $13.2 million from $18.8 million a year ago, suggesting an improving bottom line.
On the earnings conference call, CEO Linda Kozlowski said that the company was pleased with the continued strengthening of its customer base with year-over-year improvements in certain key customer metrics. She believes that Blue Apron will achieve its 2020 growth targets with the execution of its strategy, which contributed to the market's optimism. The company's high level of short interest could have supported Thursday's rally by forcing some short sellers to cover their positions amid the rising volatility.
From a technical standpoint, the stock experienced a wide range throughout the early part of the day and formed a bullish engulfing over the preceding candlestick. The relative strength index (RSI) appears neutral with a reading of 41.92, but the moving average convergence divergence (MACD) remains in a bearish downtrend. These indicators provide few hints about where prices will head over the coming sessions.
Traders should watch for a breakout from trendline resistance and the 50-day moving average at $8.06 to retest reaction highs of $9.50 or $10.50 over the coming sessions. If the stock breaks down, traders could see a move to retest lows from late June near $6.00 before mounting another rally. Future direction depends largely on Friday's price action.
The author holds no position in the stock(s) mentioned except through passively managed index funds.