Put a Fork in It: Blue Apron Could Be Cooking Up a Sale Amid Dire Quarterly Results

Illustration for article titled Put a Fork in It: Blue Apron Could Be Cooking Up a Sale Amid Dire Quarterly Results
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Meal kit delivery service Blue Apron is “evaluating a broad range of strategic options”—phrasing that usually indicates a company is instead running out of said options—after posting dismal Q4 2019 results on Tuesday that came in below investor estimates, CNN Business reported.

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Blue Apron said the company experienced a 30 percent drop in sales and investors will lose $1.66 per share, both of which CNN reported were below expectations and have continued to drive the firm’s stock price down. (The firm’s price per share was as low as 55 cents last year before a reverse stock split improved it to $8.25, but it was down to around $3.80 in after-hours trading on Tuesday.) Customers also dropped almost 37 percent from 557,000 at the end of 2018 to 351,000 at the end of 2019, and while it focused on “high affinity” (loyal) customers it failed to bring its average sales for each user up. All told, CNN wrote, the stock is down 97 percent from shortly after its initial public offering in June 2017, when it was worth just over $140 (after adjustment for the 1:15 split).

In the quarterly report, Blue Apron wrote that it was considering merging with a rival service, raising more money, simply selling the company outright, “or some combination of these.”

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“There can be no assurance that the review of strategic alternatives will result in a transaction on a timely basis, or at all, or that any transaction will produce the intended benefits for Blue Apron stakeholders,” the company wrote. “Blue Apron does not intend to comment further on this unless and until its Board of Directors determines that further disclosure is appropriate.”

Blue Apron has run hard into a number of obstacles—most prominently vehement competition from both similar services like HelloFresh and online grocers like Amazon Fresh, which is not great news considering it turns out the meal delivery demographic is relatively tiny. (In May 2019, the Los Angeles Times reported that the NPD Group consulting firm estimates just four percent of consumers have tried them at all.) It also competes against surging food delivery giants like Seamless/Grubhub and Uber Eats. HelloFresh soared past Blue Apron in the U.S. in early 2018 and has been one of the few meal kit services to continue to do well, recently posting above-expectations financial results for 2019.

CNN wrote that subscription plans (ranging between a $59.94 three meal a week option for two people to $139.84 for a family of four) and partnerships with Beyond Meat haven’t done much to stem losses. It’s now offering “Meal Prep” packages which include enough ingredients for eight meals and said in the announcement that it was considering “cost optimization initiatives,” though as CNN noted, it’s not clear what that means.

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DISCUSSION

Tebow Kneeled First

These things are services that work great for a little while but then people realize they can follow instructions and buy their own food and have practiced cooking enough to feel confident in their own skill and ditch the service.

Protip: you can follow recipes and buy your stuff and skip the entire Blue Apron step .