Blue Apron (NYSE:APRN) burned a lot of investors after its IPO three years ago. The meal kit provider's stock, after being adjusted for a reverse split last year, currently trades more than 90% below its IPO price of $10 per share.

The stock tumbled as its growth stalled out, and competitors flooded the market. Its lack of profitability, abrupt management changes, and underwhelming turnaround efforts attracted even more bears. Looking ahead into the next five years, can Blue Apron stage an eleventh-hour turnaround? 

A Blue Apron meal kit.

Image source: Blue Apron.

What happened to Blue Apron?

Blue Apron's revenue rose 11% in 2017 but slid 24% in 2018 and declined another 32% in 2019. It remained unprofitable during all three years, but its net losses narrowed in 2018 and 2019.

In the first quarter of 2020, Blue Apron's revenue tumbled 28% annually to $101.9 million, and its net loss widened from $5.1 million in the year-ago period to $20.1 million. Those results were discouraging, especially since Blue Apron cited the COVID-19 crisis as a tailwind during the quarter with restaurant closures and stay-at-home measures boosting demand for its meal kits.

Blue Apron's number of customers declined from 746,000 at the end of 2017 to just 376,000 in the first quarter of 2020. But on the bright side, in that same period, its average number of orders per customer grew from 4.3 to 4.7, average revenue per customer rose from $248 to $271, and first-quarter revenue was up 8% sequentially.

Blue Apron believes it can stabilize its business by focusing on higher-value customers instead of defending its market share against rivals like HelloFresh, Kroger's Home Chef, and Albertsons' Plated. It's also aggressively cutting costs to narrow its losses.

Unfortunately, the company still can't squeeze out a profit with this strategy, and its ongoing loss of users is ramping up the pressure to generate even higher revenue from a smaller base of customers.

The bear and bull cases for Blue Apron

The bears believe Blue Apron could run out of money before it ever generates a profit. It ended last quarter with just $29.5 million in cash and equivalents, down from $228.5 million at the end of 2017, and was shouldering $53.6 million in long-term debt.

A Blue Apron meal kit.

Image source: Blue Apron.

Meanwhile, Blue Apron could keep losing customers to its rivals. Germany-based HelloFresh, which surpassed Blue Apron as the top meal kit player in America last year, can leverage its superior scale and profitability to launch more new products and bolder marketing campaigns.

Kroger and Albertsons can aggressively promote their own meal kits through their websites and brick-and-mortar stores. Blue Apron will struggle to counter those threats and control its spending at the same time.

The bulls believe Blue Apron will eventually stop losing customers, and its average spending per customer will continue to rise. They'll note that revenue rose sequentially last quarter, and the company expects its second-quarter revenue to rise another 28% sequentially as the COVID-19 crisis boosts its meal kit orders again.

Blue Apron also has an enterprise value under $200 million, and its market cap is just one-third of annual revenue as of this writing. That low price tag could make it a tempting takeover target for its rivals or other grocers.

So where will Blue Apron be in five years?

Blue Apron isn't doomed yet, but its weaknesses are still overwhelming its strengths. It isn't offering any meaningful ways to counter its larger rivals, the COVID-19 tailwinds are likely temporary, and its main strategy is to stabilize a shrinking business while cutting costs. Unless Blue Apron is acquired, I don't see its stock heading higher -- or even remaining listed on the NYSE -- over the next five years.