If you thought foreheads were already throbbing for Blue Apron Holdings (NYSE:APRN) shareholders, things are about to get even worse. Shares of the reeling mail order meal-kit specialist hit another all-time low on Monday, after the company proposed a reverse stock split. 

This isn't a surprise. The board authorized the procedure last month. It will go up before a shareholder vote next month, and we know how investors will square up on the ballot. Blue Apron needs to remain in listing compliance, and a reverse split is the last resort to achieve the New York Stock Exchange's minimum price.

Unfortunately, we also know how this is likely to play out for shareholders. There aren't too many stocks that bounce back after a reverse split, which explains why the shares plunged 8% on Monday's news.

A family prepares a Blue Apron meal kit.

Image source: Blue Apron.

Just desserts

Blue Apron has had a messy kitchen since going public two summers ago. It was an early category leader in the booming gourmet meal-kit niche, but that's a market that's getting crowded with heavy promotional activity for outfits to get noticed. Attracting new customers is hard, and keeping existing ones around is even harder. Blue Apron is now down to 550,000 active accounts, 30% below where it was a year ago and a little more than half as many as it had at the time of its IPO.

Blue Apron is slashing expenses in an effort to make its business sustainable, but cutting back on marketing also means turning off the spigot that introduces new foodies. Blue Apron's losses are narrowing under its new CEO, but the same can be said about its chances of ever regaining the pole position in this field. There are now established players, better-financed upstarts, and supermarket chains stocking meal kits in their aisles. 

The reverse split that will follow won't make Blue Apron any more popular with consumers. The odds are strong that it will fail. Rite Aid (NYSE:RAD) is the last major consumer-facing company to go for a reverse play. The drugstore chain is trading just 8% lower since executing a 1-for-20 split last month, but Rite Aid stock has fallen 55% since its board authorized the listing-preserving move late last year. 

There have been a few outliers that have managed to thrive in the years following a reverse split, but Rite Aid is more the rule than the exception. Blue Apron's upcoming reverse split places it on a downward spiral that few companies recover from, and unfortunately for investors it's not as if the foodie flunky has much of a choice at this point.  

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