Blue Apron Holdings Inc. rallied the most since going public two years ago after announcing a tie-up with a hot brand: Beyond Meat Inc.
The struggling meal-kit company will begin introducing products from the alternative-meat startup on its menus in August, New York-based Blue Apron said in a statement. The shares rose as much as 78% on Tuesday, their biggest intraday gain since the stock debuted in June 2017.
The partnership may breathe some fresh life into Blue Apron, whose stock has plummeted more than 90% since its initial public offering turned out to be one of the worst-performing in recent history. Meanwhile, Beyond Meat shares have gained almost seven-fold since their May debut as faux meat has taken off across restaurant and fast-food chains. Beyond Meat extended those gains Tuesday, adding as much as 4.9%.
Blue Apron’s struggles stem from the meal-kit industry’s challenges attracting and retaining customers. Although subscriptions were originally marketed to people who wanted to cook but didn’t know what or how, it was soon beset with complaints: The meals were too expensive, you had to plan ahead, and people felt guilty throwing away all the packaging required to keep ingredients fresh. The nascent meal-kit industry found luring and retaining customers required margin-eating discounts and often didn’t work.
In a bid to reinvigorate growth, Blue Apron got inside brick and mortar retail, but Costco Wholesale Corp. ultimately dropped the meal-kit boxes to make space for seasonal products.
Blue Apron and Beyond Meat are both popular targets for short sellers. Short interest accounts for about 28.5% of Blue Apron’s float and almost 45% of the Beyond Meat shares available for trading, according to data compiled by financial analytics firm S3 Partners.