Was Blue Apron Doomed From The Beginning?

Less than 18 months after its high-profile IPO, Blue Apron Holdings Inc APRN is officially a penny stock.

Blue Apron shares dropped below $1 for the first time this week, marking a more than 90 percent decline from its June 29, 2017 IPO price of $10. With heavy hitters targeting the company’s key market even before it went public, it now seems as though Blue Apron may have been outgunned from the start.

Pre-IPO Bombshell

Ironically, the first major blow for Blue Apron investors happened before the stock had its first day of trading.

On June 16, 2017, less than two weeks before the Blue Apron IPO, Amazon.com, Inc. AMZN dropped a bombshell, announcing a $13.4-billion buyout of Whole Foods Market. The announcement that Amazon would be entering the grocery space severely impacted demand for Blue Apron IPO shares. After announcing an intended price range of $15 to $17 per share on June 1, the company ultimately priced its IPO at just $10.

Even after the price cut, Blue Apron shares tanked in the stock’s first several weeks on the market, culminating with a larger-than-expected earnings loss in Blue Apron’s first quarterly report as a public company. Blue Apron also reported that the size of its client base dropped by 9 percent in the quarter.

Walmart Enters The Mix

In the year and a half that followed, the competition for Blue Apron got more intense with Uber Eats, GrubHub Inc. GRUB and other companies ramping up delivery offerings. One silver lining for Blue Apron may be Walmart, Inc. WMT. In October, Blue Apron and Walmart subsidiary Jet.com struck a deal for Jet to sell Blue Apron meal kits on its platform as part of its recently launched City Grocery initiative.

Walmart e-commerce CEO and Jet.com co-founder Marc Lore said this week Walmart customers may eventually get meals and food delivered right to the refrigerators in their homes.

“You can watch it on your iPhone and see them come in, put it in your fridge and leave, to sort of build confidence and trust in these Walmart associates doing it. So...imagine going out to work, coming home, and there it is. The stuff's in your fridge already,” Lore said.

While Walmart’s refrigerator delivery service is only an idea at this point, Lore said Walmart will have same-day delivery available to 60 percent of the U.S. population by the end of 2019.

Historically Bad Performance

Competing with the likes of Amazon is a tall order for a $169 million company like Blue Apron, and it remains to be seen whether the Walmart partnership can save Blue Apron. The best-case scenario for investors at this point may be that one of the company’s larger competitors or partners sees enough value in the company to justify a buyout.

According to Bloomberg, Blue Apron’s abysmal market performance makes the stock the third worst-performing U.S.-listed IPO of the past decade.

Blue Apron stock dropped another 5 percent Wednesday to new all-time lows below 90 cents.

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Photo courtesy of Blue Apron.