Blue Apron (NYSE:APRN) is one of the most hated stocks on the market. After making its public debut at $10 last June, the meal kit maker's stock plummeted to $2 on concerns about its slowing sales, lack of profitability, and escalating competition.

But is Blue Apron truly headed to zero? Or is the stock oversold and primed for a rebound? Let's take a closer look at the numbers to find out.

A Blue Apron meal kit.

Image source: Blue Apron.

Are the numbers that bad?

Blue Apron's core growth is measured through its number of customers, average revenues per customer, and total revenues. Those figures failed to impress investors during Blue Apron's first three quarters as a public company.

Metric

Q2 2017

Q3 2017

Q4 2017

Number of customers

23%

(6%)

(15%)

Average revenues per customer

(5%)

8%

1%

Total revenue

18%

3%

(13%)

YOY growth. Source: Blue Apron quarterly reports.

Blue Apron's rising average revenues per customer over the past two quarters were wiped out by its losses in total customers. To make matters worse, Blue Apron laid off hundreds of employees, switched CEOs, and tried to cut costs during that meltdown.

Those were arguably the wrong moves, since downsizing in the face of tougher competition was likely to result in more market share losses. On the bright side, those tougher cost controls tightened up its bottom line during the fourth quarter.

Metric

Q2 2017

Q3 2017

Q4 2017

Adjusted EBITDA

($24 million)

($48 million)

($19.7 million)

Net loss

($31.6 million)

($87.2 million)

($39.1 million)

Source: Blue Apron quarterly reports.

Unfortunately, it still doesn't look like Blue Apron can generate a profit anytime soon. With a reduced marketing spend (down 32% annually last quarter), it's unclear how Blue Apron plans to reverse its customer losses or counter the competition.

How tough is the competition?

Blue Apron is still the top meal kit maker in America, but it now faces a growing list of formidable rivals.

A Blue Apron meal kit.

Image source: Blue Apron.

Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT) now both sell first-party and third-party meal kits. Amazon's Prime and AmazonFresh memberships, backed by its network of Whole Foods stores, give it plenty of ways to promote meal kits. Walmart, meanwhile, can bundle its meal kits with other groceries for curbside pickup and home delivery options.

But that's not all. Weight Watchers (NASDAQ:WTW) recently launched a new line of meal kits, Albertsons recently bought meal kit maker Plated, and German meal kit maker HelloFresh -- which went public late last year -- declared that it could overtake Blue Apron in the US market in the near future.

Blue Apron is clearly outgunned, and it doesn't have many ways to fight back. It finished last quarter with $228.5 million in cash and equivalents, but its cash flow is negative and it's still shouldering $124.7 million in long-term debt. That doesn't leave it much room for acquisitions or new investments.

But how low can the stock go?

Some investors might have given up on Blue Apron, but I'm not convinced that it's headed to zero, for two reasons.

First, the company has an enterprise value of just over $400 million, which gives the stock an EV/Sales ratio of 0.5. Any suitor that pays $400 million for Blue Apron would get a company which is expected to generate $841 million in revenues this year.

A larger company, like Amazon or Walmart, could greatly reduce Blue Apron's operating expenses by integrating the business into its other units -- which would reverse its losses and potentially make it profitable. Blue Apron could also be a lucrative target for HelloFresh, which might find it easier to simply buy its American rival instead of competing against it.

Second, about 36% of Blue Apron's float was being shorted as of March 9. This means that any good news or buyout buzz about the company could spark a short squeeze.

The key takeaway

I personally wouldn't buy Blue Apron as a turnaround play since it doesn't have the moat or branding power to go toe-to-toe against companies like Amazon and Walmart.

However, the stock is very cheap, and it's still a decent buyout target -- provided that it can stabilize its customer growth. Therefore, I don't think Blue Apron can reclaim its IPO price, but I also don't think that it's headed to zero anytime soon.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Leo Sun owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.