Investors are giving Blue Apron the cold shoulder amidst a resounding boom for Amazon (NASDAQ:AMZN), the food-delivery company’s chief competitor which recently acquired Whole Foods.Blue Apron Holdings Inc (NYSE:APRN) has faced countless setbacks recently, stemming from a myriad of problems, chief amongst them a seemingly insurmountable competitor in the form of Amazon and relatively lackluster long-term interest in the company’s food delivery services from customers.
Too many cooks in the kitchen
Blue Apron shares have plummeted recently, suffering a series of losses that have led some analyst to note that company is making investors endure a period of “stockholder starvation” as they wait for prices to climb again. Those investors are likely to be waiting for some time; after Amazon acquired Whole Foods, the company’s long-term prospects were essentially eviscerated overnight, and Blue Apron will struggle to deal with its mounting problems as competition from Amazon and countless others heats up.
The math isn’t too hard to understand; with Amazon’s behemoth market share, and the widely renown “organic” branding of Whole Foods, Blue Apron stands to lose to a competitor which has infinitely more money to throw at food service delivery dilemmas and a much more readily established brand. After shares debuted in a highly anticipated IPO at around $10 per share, the price of Blue Apron’s stock has continuously plummeted, particularly after Amazon’s acquisition, floating at one point to below $3 per share.
Amazon’s entry into the meal-kit delivery service market cannot be understated; after Amazon filed a meal-kits trademark, it spurred nightmares in the industry that few smaller players like Blue Apron would be able to compete with it, particularly now that it can harness Whole Food’s organic labels to cater to middle class shoppers hoping to eat healthy greens.
A desperate shakeup
Increasingly, the dilemmas facing Blue Apron appear to be growing in size and scope, and may be beyond the power of any on CEO to solve. The meal-kit delivery service only recently announced it would be seeing its current CFO step up to assume the mantle of CEO, a decision likely to inspire hopes of forthcoming change in its ICO list, but unlikely to do enough to alleviate concerns about the company’s future. The company’s most recent earnings reports have been lackluster, inspiring grim portraits of a future defined by continued losses of revenue and little consumer interest in having their meals shipped ready-to-cook to their doorsteps.
Blue Apron shouldn’t be thrown out to the pasture entirely, however; the company enjoyed a mild surge in stock prices recently, climbing by nearly 20%, after Barclays saw a “stabilization point” in its pricing. With future earnings reports likely to be similar to recent, disappointing ones, however, and with Blue Apron’s fierce competition only heating up more and more, such gains are likely to be temporary in nature. Investors focused on long-term dividends would be wise to shun Blue Apron until such a time as its management team pulls a few rabbits from their hats, refocusing the company and bringing in better revenue figures.
Perhaps a change in management, a shift to focus more on delicacies, and better delivery services that cater more to individual customer preferences will salvage Blue Apron’s profits in the short term, but the reality is that the company is simply in too deep in a market that is wholly too ferocious for its long-term survival. While investors on the lookout for short term deals may salivate at the prospect of Blue Apron’s rapidly fluctuating prices, those aiming to become permanent or long-time shareholders of a prosperous company aren’t likely to find themselves at home with the meal-kit delivery service.