If you invested $1,000 in Blue Apron (APRN) when it went public in 2017, you'd have less than $50 today. Past performance doesn't always reflect future performance. But investors should think twice before betting on this floundering meal-kit company, because the factors that caused its spectacular crash are still at play.

What went wrong for Blue Apron?

Founded in 2012, Blue Apron was one of the first meal-kit delivery companies in the U.S market. This should have given it high brand recognition and a first-mover advantage. But the company completely dropped the ball. According to the online magazine Vox, Blue Apron boasted a 40% market share the year it went public in 2017. A later report by Bloomberg found that this number had fallen to just 9% by 2021.

Red stock tickers flashing Sell

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Despite being first to market, Blue Apron has been crushed by newer rivals such as Hello Fresh, which increased its market share from 28.4% to 69% in the same period. Some of Hello Fresh's growth is due to acquisitions such as Green Chef and Factor 75, incorporated in 2018 and 2020, respectively. But more importantly, Blue Apron's slump reflects its lack of a competitive moat -- a business's ability to differentiate itself from similar competitors.

All the delivery meal-kit companies offer essentially the same thing, and Blue Apron hasn't created a reason for consumers to pick its service over the alternatives. In fact, it seems to have done the opposite.

Can management's new strategy turn things around?

Blue Apron highlighted its turnaround strategy during its investor day in May. The plan aims to engage more high-value customers, expand menu variety, and scale marketing infrastructure. Management also suggests returning value to investors through a possible share buyback of $25 million. Unfortunately, none of these ideas address what seems to be Blue Apron's primary problem -- a lack of differentiation from rivals.

Attracting bigger-spending customers sounds great in theory. But it's unclear how Blue Apron will pull this off when consumers are clearly not particularly impressed with its offerings, as evidenced by its sharp decline in market share over the last few years. Furthermore, expanding menu variety won't differentiate Blue Apron from its biggest rival, Hello Fresh, which already offers around 25 distinct recipes per week compared to Blue Apron's 19. And with second-quarter marketing spend of roughly 308 million euros ($302 million), Hello Fresh is also far ahead of Blue Apron's $21.8 million in marketing spend in the corresponding period.

The possible share buyback might generate excitement in the short term. But it's hard to see how a money-losing business can create sustainable investor value by buying back its own stock, instead of using that money for business purposes.

Blue Apron is still a high-risk investment

Blue Apron's turnaround plan may be a glimmer of hope for the battered company. But investors should pay more attention to its current financials, which aren't pretty. Second-quarter revenue increased by less than 1% year over year (from $124 million to $124.2 million), while operating losses jumped 85% to $22.7 million after a spike in marketing spending and general expenses. The company doesn't seem to have a pathway to profitability, or a particularly convincing turnaround strategy. And investors should stay far away from the stock until this changes.