What happened

Shares of Blue Apron (APRN) stock were sliding today after the struggling meal-kit company said it would enact a reverse stock split in order to keep its stock price above $1 and avoid being delisted by the New York Stock Exchange. The announcement came as Blue Apron's stock has been trading under $1 for two weeks now, and it received a warning from the NYSE on Friday. Shares touched an all-time low today on the news, and as of 11:20 a.m. EDT, the stock was down 12.9% to $0.65.

So what

In a press release today, Blue Apron said it was proposing a reverse stock split of 1-to-5 for Class A shares and 1-to-15 for Class B shares, which would be put to approval at the annual shareholder meeting on June 13.  Class A shares are the ones that trade publicly, so investors should expect the stock price to jump by five times, assuming the measure is approved. Class B stock currently has 10 votes per share while Class A shares have just one, so the measure would give even more voting power to current Class B stockholders. 

A collection of Brussels sprouts

Image source: Blue Apron.

Management said the primary purpose of the reverse stock split is to increase the price of Class A stock and "improve the marketability and liquidity of the Company's Class A common stock and may encourage interest and trading in the stock." 

It also said the move would help it regain compliance with the NYSE, which sent notice on Friday that Blue Apron was at risk of being delisted, as the NYSE requires that the average closing price of a stock over a 30-day period be at least $1. If not, the company in question must present in plan to lift the stock above $1, which is often a reverse split.

Now what

Blue Apron's reverse split is just the latest sign of trouble for long-suffering meal-kit stock. Though the company claims that the move will help improve the marketability of the stock, that seems unlikely without improving fundamental results, and reverse splits often act as stains on the stock, showing the company needs artificial help to stay afloat.

Investors momentarily sent the stock up in April when the company announced that Linda Kozlowski, former Etsy COO, would become the new CEO, replacing Brad Dickerson. Since then, Blue Apron has released an earnings report that failed to impress investors, and competition continues to mount. Meanwhile, there's been little evidence of any big changes under Kozlowski. 

While the stock price may not look so bad after the reverse split, expect the company to continue to struggle.