What happened
Shares of Blue Apron Holdings Inc. (APRN) were down more than 7% earlier in trading, but have recovered some of those losses. As of 12:21 p.m. EDT, they had tumbled about 6%, a continuation of the recent downward trend for the company's stock. Since the beginning of 2018, its shares are down more than half, and since going public in mid-2017, Blue Apron investors have seen the market swallow up more than 81% of the company's market value.
So what
As often happens, today's drop can't really be directly attributed to any one thing. Blue Apron didn't make any announcements or Securities and Exchange Commission filings, and nothing specific or material about any of its many competitors came out today, either. This can be quite frustrating for investors, but it's a not-so-subtle reminder that this is often the way markets work, especially for micro-cap companies like Blue Apron. At this writing, the company's market capitalization is $358 million.
Image source: Getty Images.
Now what
It's probably tempting for some investors to view today's tumble -- and maybe the big decline since IPO -- as an opportunity to invest in Blue Apron. And eventually, that may prove to be the case. But as things stand today, there's a lot of uncertainty around Blue Apron's ability to differentiate itself from its many competitors -- a list that's increasing by the day. This is one of the reasons why the company's sales fell 13% in the fourth quarter, and the number of customers who bought fell by more than a quarter-million from pre-IPO levels.
Blue Apron is making some smart moves that could help. The company recently announced it would make its meal kits available in grocery stores, and also announced a partnership with Airbnb for a limited-time "international culinary experience" featuring six international recipes from Airbnb Experience hosts. Between these efforts to reignite sales growth and steps to cut costs and improve profitability, management is aiming to reach breakeven on an EBITDA (earnings before interest, taxes, depreciation, and amortization) by year-end.
But considering the increasing number of competitors and a reversal from sales and customer growth to declines in the fourth quarter, it's far from certain that Blue Apron will turn things around. Today's price drop may look appetizing, particularly considering how far the stock has fallen in less than a year. But with a lack of competitive advantages, diminishing sales, and steady losses, investors would probably do well to stay on the sidelines for now.
