Despite its occasional short-term spikes, Blue Apron (NYSE:APRN) stock continues its trend downward. So far, new food offerings, changes in management, and a reverse stock split have failed to rescue Blue Apron stock.
Demographic, lifestyle, and technology trends have helped drive demand for meal kits. As a result, one can understand the emergence of Blue Apron. However, unless APRN can find a way to stand out from its peers, any move higher by Blue Apron stock will amount to little more than selling opportunities.
Blue Apron Stock Continues to Decline
Nothing seems to change for Blue Apron stock. The shares’ continuous overall declines have sometimes been interrupted by temporary rebounds. Thus far, APRN has suffered a 1-15 reverse stock split in June, as well as a decline of nearly 96% from its split-adjusted IPO price of $150 per share.
APRN’s decision to bring in a new CEO made investors optimistic about Blue Apron stock for a short time. However, that rally quickly faded. By the way, Blue Apron also hired a new CEO in 2017.
APRN stock also gained temporary traction when the company added products from Beyond Meat (NASDAQ:BYND) to its menu. Again, that gain quickly faded. Such behavior appears to show that every move higher by APRN stock seems to be a great time to sell the shares.
Blue Apron Does Not Stand Out in the Meal-Kit Business
That said, investors should not confuse my criticism of APRN stock with pessimism about meal kits in general. The meal-kit market grew by 36% in under a year. InvestorPlace columnist Josh Enomoto mentioned that millennials love eating out but hate driving. As a result, by enabling consumers to order meal kits through an app, APRN has supposedly created a powerful, positive catalyst for APRN stock.
However, there is a great deal of competition within the meal-kit sector, and this goes far beyond the emergence of HelloFresh, which incidentally has partnered with Walgreens Boots Alliance (NASDAQ:WBA). Larger, deep-pocketed grocers such as Walmart (NYSE:WMT), Amazon (NASDAQ:AMZN), and Kroger (NYSE:KR), have also entered the meal-kit business. Also, as InvestorPlace contributor Luke Lango points out, meal kits’ growth could slow to the single-digit-percentage range by 2023 if estimates by Packaged Facts prove correct.
Unfortunately for APRN stock bulls, nothing about Blue Apron differentiates it from any other meal-kit provider out there. And let’s be honest, any halfway-motivated culinary school graduate (and some non-graduates) could develop such kits and package them. The only thing narrower than the moat for Blue Apron stock is the company’s opportunity for a recovery.
APRN’s Financials Paint a Bleak Picture
Any serious look at the company’s financials confirms its challenges. Bulls may point to the 54.3% reduction in the company’s per-share losses that analysts, on average, forecast for this year. However, if APRN does meet that estimate, Blue Apron will lose $4.32 per share this year instead of the $9.45 per share of losses it sustained last year.
Moreover, its losses only shrunk this year because it cut its spending on marketing. These spending cuts will probably help lower its 2019 revenue to analysts’ average estimate of $473.31 million. Blue Apron’s top line cam in at $667.6 million in 2018.
As things stand now, Wall Street analysts expect the company to continue to lose money through at least 2023. However, Blue Apron stock will fall to $0 long before that time unless Blue Apron changes its course quickly. Perhaps the company can find a way to increase revenues despite its lower marketing spending. Also, Blue Apron could attract more business by finding a large partner like Walgreens. Still, unless something changes, APRNs results will likely continue to worsen.
The Bottom Line on Blue Apron Stock
So far, every short-lived rally by APRN stock has proven to have been a great time to sell the shares. Blue Apron stock’s lack of traction may appear strange, as it remains a well-known name in a growing industry. Meal kits should continue to grow in popularity for the foreseeable future. However, nothing is proprietary about Blue Apron’s approach. Consequently, players large and small have entered this business, leaving APRN without any apparent competitive advantage.
Thus far, cutting marketing spending to save money has only led to lower revenues for APRN. It is not too late for a new, unique offering or a key alliance with a larger player to rescue APRN stock. Still, as things stand now, APRN stock has produced feasting for shorts and famine for longs.Unless the company makes significant changes soon, investors with bullish positions in Blue Apron stock could be forced to get their meal kits from a soup kitchen instead of from APRN.
As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting.