Blue Apron Holdings Inc (NYSE:APRN) is a cautionary tale for all those investors who think they should grab every new IPO that comes along.

Since its market debut in June, the meal kit company has lost about two-thirds of its value, and opened for trade January 12 at $3.53 per share.

Even at that price, it’s getting as many buyers as a Blue Apron meal kit that’s been sitting on the kitchen counter for a week. Vince Martin wrote late last year that the stock is likely headed to zero and I find it hard to disagree with him.

I bought the Blue Apron product, back in the day, and urged my college-age son to do so at his dorm. It seemed like a good deal — pre-portioned meals and instructions even the kid could follow.

But, even then, I could see its demise ahead.

APRN Stock Needs Lift Soon

Blue Apron is a teaching tool in the guise of a dinner.

Pre-portioned meat and vegetables teach proper portioning. The clear, concise directions teach basic cooking skills. As you gain confidence, you can find yourself going to the store, seeing the same ingredients at low grocery store prices, and there goes Blue Apron.

The only way for the company to survive is to churn, to create new buyers constantly. So new CEO Bradley Dickerson, formerly with Under Armour Inc. (NYSE:UAA), has shifted marketing gears, dropping podcasts for TV ads  that only illustrate the difficulty of getting full value from the product.

Dickerson’s hiring gave a lift to the stock in December but this will be short-lived unless he can beat estimates on February 1 that have him cutting the company’s losses in half, to 27 cents per share or $50 million from 47 cents per share the previous quarter, giving the company more time to save itself with its $266 million in cash.

Those estimates, by the way, call for revenue of $187 million, the worst performance in over a year. Small wonder that Zacks now has a sell rating on the stock. 

Just Walk Away from APRN Stock

More recently, Martin looked at a potential options trade with Blue Apron, an “iron butterfly” betting the stock price will continue to fall. But even here he couldn’t pull the trigger. The cash drain is just too much.

Cutting marketing costs, fixing fulfillment and reducing cash drain are not a sustainable business model.  Blue Apron must find a way to grow, and with growing competition from Amazon.com, Inc. (NASDAQ:AMZN), the only possible way out is to sell the company into stronger hands, like those of Kroger Inc. (NYSE:KR), which has been nibbling around the edges of the meal kit market.

But why should Kroger buy unless Blue Apron can get out of its dive and show itself sustainable? Wouldn’t it be cheaper for Kroger, or Wal-Mart Stores Inc. (NYSE:WMT), to jump in under their own, stronger brands?

The Bottom Line on APRN Stock

There is value in the subscription model but, as with other fads like group-buying and flash sales, there is less value here than meets the eye.

If Blue Apron could become a niche business, selling farm-to-table ingredients from smaller fulfillment centers, it might attract a sustainable clientele. Unique ingredients for discerning cooks could earn it the kind of margins it needs to succeed, but there is no indication it’s moving in that direction.

The bottom line is that this is just not a mass market business. Sad, but true. The food and recipes were great, but my son can cook for himself now. Thanks, though.

Dana Blankenhorn is a financial and technology journalist. He is the author of the historical mystery romance The Reluctant Detective Travels in Time, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AMZN.