After months of hype and speculation, Blue Apron finally went public on June 29. The meal kit delivery service started selling shares of their stock to willing investors at the low price of $10 per share. The newly public company will use the millions made to expand their business and cut costs.
For the relatively new company, going public means increased visibility, more revenue, and (hopefully) a chance of turning a profit. Investors putting their money into the company could see successful gains if/when the company succeeds. With the rock-bottom share price of $10, this could mean doubling one’s initial investment and then some over several years.
Yet the chances of that happening are rather slim. Since the stock’s launch on June 29th, Blue Apron’s stock ($APRN) hasn’t rapidly increased in value as most tech-oriented stocks do. In fact, it hasn’t increased in value at all. Rather, it fell by an astonishing 10%.
When your stock forgets to pop.
When tech stocks like Facebook ($FB) and Snap Inc. ($SNAP) launched in the last few years, their share prices drastically increased or “popped” during their first trading day. This increase in value stems from a sudden increase in demand, as the stock recently launched and investors want to get into an exciting new opportunity. Even a relatively unknown tech company like Yext ($YEXT) made a small but noteworthy increase in value during their first trading day.
Blue Apron’s stock did not pop upon launch. After the first full day on the stock market, $APRN actually decreased by .45%. This means that the company’s first public investors lost money in less than seven hours. This is something that doesn’t have so often during IPOs and stock launches — especially when it comes to tech stocks.
No one really cares about Blue Apron’s stock.
Blue Apron’s stock continued to decline since June 29th. As of this writing, $APRN is worth $8.99, a 10.4% decline in value since their launch. This is mainly due to lack of demand in the stock, which itself stems from a variety of reasons:
- Blue Apron isn’t profitable. The company has yet to consistently turn a profit, and are losing money each quarter. Though this is relatively normal for a new, tech-focused stock, other recently launched stocks like Snapchat face the same issue. Since $SNAP isn’t doing well and $APRN’s financials follow similar trends, investors are wary to invest in it.
- The company has a bunch of competitors. Aside from Hello Fresh and the countless other meal kit services, Blue Apron now has to worry about Amazon’s acquisition of Whole Foods. Such an acquisition will make grocery delivery cheaper and easier for millions of Americans, which will inevitably cut into Blue Apron’s bottom line.
- Amazon can launch their own version of Blue Apron. Heck, any major corporation can launch an alternative to the standard Blue Apron service. This won’t put Blue Apron out of business, but it could starve them of new customers or steal away existing ones. More competition is bad for Blue Apron, and it’s only a matter of time before a big name creates a copycat service.
- Blue Apron is small. The company ships 8 million meals monthly. How this translates into actual subscribers is anyone’s guess, but it’s small compared to the number of customers at traditional grocery stores. If investors think Blue Apron has the chance to upend the traditional grocery store model, it would be worth more than it currently is.
Should you invest in Blue Apron?
Investors are split right now on whether or not Blue Apron is a good investment. On one hand, it makes a decent enough amount of money, is growing in demand, and could potentially become profitable in the future. At the same time, it’s down over 10% just a few days after launch and faces uncertainty in an Amazon-dominated future.
If you think Blue Apron has a bright future despite competition and investor apathy, you could still invest in it. If you bought it now, you’ll even get it for a sweet discount compared to when it launched. Just be sure to do your research in the company’s finances and forward looking statements before you invest. If you think the decrease in share price and lack of interest in the stock is a sign of things to come, simply invest elsewhere.