What happened
Shares of Blue Apron (APRN) were sliding today, falling below $1 a share for the first time. Though there was no specific news out on the company, the $1 mark is an important threshold, and trading below it could trigger some unsavory decision-making for management. Shares were down 8.2% as of 11:12 a.m. EST on high-volume trading.
So what
The New York Stock Exchange (NYSE) does not allow shares to trade below $1, seen as penny stock range, for an extended period of time, or the stock would be at risk of being delisted. In general, the NYSE will inform a company if its stock has traded under $1 a share for 30 straight days that it may become delisted. The company can then explain to the NYSE how it will get the stock above $1, or risk being removed from the exchange.
Image source: Blue Apron.
If Blue Apron stock continues to trade below $1, the easiest way for management to avoid being delisted would be to do a reverse stock split, but that would send a dire signal to investors, as it would indicate that the company doesn't have any fundamental strategy for boosting the share price and creating value.
Now what
Less than 18 months ago, Blue Apron debuted at $10 a share, but the company's publicly traded history has been marked by unforced errors, rising competition, and a general maturing of the meal-kit industry. As a result, the stock has steadily lost value over the last year and a half.
In its third-quarter earnings report, management said it would lay off 4% of the workforce as part of a plan to deliver positive adjusted EBITDA next year. Still, the stock's continuing sell-off indicates investor skepticism of that plan, especially as the company is rapidly losing customers. Given the broader weakness in the stock market, it may be difficult for Blue Apron stock to top $1 a share in the near future.
