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Blue Apron $15 million stock sale: Can the stock stage a recovery?

By Manaswita Ghosh Dutta

Edited by Jekaterina Drozdovica

08:13, 14 October 2022

Grocery delivery service company Blue Apron's mobile app icon is seen on a smartphone.
Can the stock stage a recovery after $15m stock sale? Photo: Tada Images / Shutterstock

American ready-to-eat meal kit services provider Blue Apron (APRN) has witnessed a sharp plunge in its stock price in 2022, largely due to inflationary pressures which affected consumer demand for the company’s products. 

In addition, a change in company management coupled with a high-value stock offering by the firm, a shrinking customer base and lower orders volume also took a toll on the company’s financials.

In this article, we take a look at the latest Blue Apron stock sale, the company’s latest earnings, its business operations, and other factors shaping APRN stock price.

What is Blue Apron?

Blue Apron is a New York-based meal delivery services provider. The company offers meals with fresh ingredients along with recipes, weekly meal delivery services with multiple recipe choices, including vegetarian and non-vegetarian options.

The company was established in August 2012. Shares in the company went public on 29 June, 2017. The initial public offering (IPO) amounted to 30 million shares at $10 each, which was at the low end of the expected range of $10 to $11 a share.

Blue Apron shares trade on the New York Stock Exchange (NYSE) under the ticker “APRN”.

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Blue Apron stock price suffers downtrend

Blue Apron Holdings stock has fallen over 65% year-to-date, as of 12 October. The loss was wider than the NYSE Composite, where the stock is listed. The index has lost more than 21% since the beginning of 2022.

From the date of the firm’s listing on the NYSE, the share price has lost more than 98% of its value, falling to $2.14 (as of 12 October), according to Morningstar.

A quick Blue Apron stock price analysis shows that Blue Apron stock hit an all-time high of $150 on June 29, 2017, when it went public.

Blue Apron stock price, 2017 - 2022

Blue Apron stock sale hurts the share price

A major reason behind Blue Apron stock’s fall was the firm’s decision to sell nearly $15m-worth of its Class A common stock in an at-the-market equity offering program earlier this month, the company said on 6 October.

The Blue Apron stock sale had a total of 4.6 million shares of Class A common stock sold at an average sale price of $3.25 a share, bringing the total value of the shares offered to $14.5m.

Linda Findley, the company’s president and CEO, said that the company’s shares issuance program will provide it with additional capital to move the business forward. The company intends to use the net proceeds for general corporate purposes, including working capital, operating expenses and capital expenditures.

However, the stock sale was not taken lightly by investors. The shares issuance came amid a lowered 2022 revenue growth target and the resignation of CFO Randy Greben toward the end of September. Greben will leave Blue Apron on 17 October, 2022. The company appointed Mitchell Cohen to serve as interim CFO after Greben’s departure.

Blue Apron said in its second-quarter earnings release:, “As a result of persistent inflationary pressures which are impacting consumer demand, the company believes it is prudent to adjust its 2022 revenue growth target to 7% to 13% compared with 2021, and focus on driving to profitability.”

The decline in the company’s stock price came amid former company director Barry Salzberg selling 267,354 shares since his last 13D form to the Securities and Exchange Commission (SEC) was filed in September 2021. 

As of 4 October 2022, Salzberg owned 1.6 million shares in Blue Apron, according to a SEC filing of the same date. Salzberg resigned from the company board in September 2021.

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Blue Apron’s financials: Second quarter

Blue Apron widened its loss to $23.1m in the quarter ended June 30, from $18.6m in the year-ago period, according to the earnings report released on 8 August. The primary reasons behind the wider second-quarter loss were a decline in the number of orders and a shrinking customer base.

Diluted net loss, however, narrowed to $0.68, down from $0.98 a year earlier. Losses in the second quarter were wider than the FactSet consensus for per-share losses of $0.64.

The firm’s orders fell to 1.7 million in the second quarter from 1.97 million a year earlier, while the number of customers declined to 349,000, from 375,000.

Although the average order value increased to $67.14 in Q2 2022, from $62.72 in Q2 2021, orders per customer fell to 4.9 from 5.3. Blue Apron’s average annual revenue per customer also fell to $328, from $330.

Net revenue for Q2 rose marginally to $124.2m, from $124.01m on an annual basis. The slight increase in net revenue was due to a bulk sale valued at $10m to an enterprise customer by a company-related party, Blue Apron said.

Findley said that the company continued to execute its new strategy in Q2. She noted that “though significant inflation and the continued post-pandemic acceleration in travel impacted customer count, we saw encouraging signs from our new brand campaign launched in April 2022. The heightened awareness from the program drove a tangible increase in traffic to our site.”

Where next for the Blue Apron stock?

Looking ahead, the cost of Blue Apron stock may benefit from the company’s efforts to increase sales.

Earlier this week, Blue Apron said that it was now offering meal kits without a subscription in the US Amazon (AMZN) store. This was a continued expansion of the firm’s third-party channel strategy to increase customer exposure. 

The product offering includes its ready-to-cook options, family favourites recipes, and quick heat and eat meals. The company’s recipes are available with Amazon Alexa.

Julie Gillespie, head of market research at TipRanks, said that this news “could help open the door to a larger customer base that was not willing or able to commit to ongoing services.” She added: 

“This will reduce the consumer barrier to entry, providing an easy way to experience Blue Apron meals without commitment. This builds on their existing relationship with Amazon, which already helps place them in front of potential customers at a higher rate.”

Looking at Blue Aprons' estimated website traffic on TipRanks as of 13 October, their Q3 (Jul-Sep) traffic was estimated to be up 155% year-on-year, which could indicate positive results in their upcoming quarterly earnings report scheduled for 3 November. 

However, they recently announced lower-than-expected revenue guidance, causing the stock to fall. Blue Apron has failed to meet analysts’ estimates in the past seven earnings reports.

For this quarter, analysts are anticipating loss per share of -$0.52, narrower than the -$1.17 reported a year ago. A positive surprise on their earnings could help boost the Blue Apron stock, which has been struggling this year amidst tough market headwinds.

Additionally, the firm’s expansion of convenient meal options to include snacks and lunch could boost sales. According to a 24 August news release, the “new add-ons feature kid and adult-approved recipes, perfect for an after-school snack, packable lunch, a simple dinner, or somewhere in between.”  

In other Blue Apron news, the firm partnered with carbon management platform Planet FWD, becoming the first meal-kit on the platform. The firm is aiming to become a climate-friendly meal-kit company, and the partnership could help Blue Apron lower the “cost and complexity of creating sustainable and carbon neutral products”, which may increase its profit margin.

Keep in mind that analysts’ predictions about the Blue Apron share price can be wrong. Always conduct your own due diligence on the stock before trading, looking at the latest news, a wide range of analyst commentary, technical and fundamental analysis. Note that past performance does not guarantee future returns. And never trade money you cannot afford to lose. 

FAQs

Is Blue Apron stock a buy?

Whether the Blue Apron stock is a buy, sell or a hold, depends on your risk tolerance, investing goals and an overall trading strategy. Always conduct your due diligence before trading. 

Keep in mind that analysts’ predictions about the Blue Apron share price can be wrong. Always conduct your own due diligence on the stock before trading, looking at the latest news, a wide range of analyst commentary, technical and fundamental analysis. Note that past performance does not guarantee future returns. And never trade money you cannot afford to lose.

Who owns Blue Apron?

Blue Apron was founded by Matt Wadiak, Matt Salzberg and Ilia Papas in 2012. The company is owned by Blue Apron Holdings.

Does Blue Apron pay dividends?

Blue Apron did not pay a dividend, as of 13 October.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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