You don't have to take charge exclusively in the kitchen if you're a fan of Blue Apron Holdings (APRN +0.00%). You will soon be able to charge anywhere you can if you apply for the new Blue Apron credit card. The pioneer of home-delivered gourmet meal kits announced a partnership with Aspiration to roll out the Blue Apron Aspiration Zero Card, a co-branded credit card issued through Mastercard.
Why would Blue Apron think that this is a good idea? This is an industry with historically high churn rates, as patrons either tire of piecing together their meals with premium-priced meal kits or take advantage of aggressive promotions from rival services to go from platform to platform. Aren't there going to be a lot of these credit cards collecting dust in the sock drawer after customers move on from Blue Apron?
There's also the eco-friendly angle here. Aspiration promises to plant a tree with every qualifying Blue Apron purchase on the card. It's a noble thought, but I'm guessing folks willing to have a company ship weekly edibles in climate-controlled packaging aren't exactly making saving the environment a high priority. It's certainly true that Blue Apron expects to be carbon neutral in its operations by March of next year, but beating the green drum sounds odd for a meal-kit provider.
More importantly, why did the shares open 2% higher on Thursday following the news? Am I the only one who sees this move as a waste of time for all related parties? Let's whip out the cutlery and dive in.
Image source: Blue Apron.
Seeing red
Blue Apron isn't at its best right now. The 350,000 customers it has on its rolls is its weakest number of active accounts in more than six years. We're at roughly a third of the current clients it was servicing at its peak four years ago.
Blue Apron was briefly a hot number last year. The stock soared early in the pandemic, as meal kits became a popular way to duplicate the restaurant experience without having to leave home. The break came at a critical time, as Blue Apron had posted 10 consecutive quarters of double-digit year-over-year declines in revenue. The pandemic birthed a revival in the brand, but it proved fleeting. After four quarters of positive growth, Blue Apron has posted back-to-back quarters of declining revenue.
Inflation is factoring into the mindset of folks willing to pay more for food, but it's hard to find a positive trend at Blue Apron outside of the improving average revenue per order. Average revenue per customer and orders placed per customer in Blue Apron's latest quarter were its worst showing in more than a year.
The stock did spike earlier this month when the omicron variant got Wall Street partying like it was the springtime of 2020 again, but it's not the same. The stock has already surrendered more than a third of last week's peak value. Investors get excited about food delivery stocks when it seems like we will be sheltering in place again, but grumble in the belly doesn't last very long on Wall Street.
Blue Apron's brand is strong enough to lead in these brief spurts, but putting out a co-branded credit card is an idea that doesn't appear to have been thought through very well. In Blue Apron terms, it's undercooked.
