Blue Apron helped pioneer the do-it-yourself meal kit delivery industry. But that first-mover advantage has hardly been a recipe for financial success.
The company has not made an annual profit since its launch a decade ago. Once the dominant company, its share of the food kit market has been steadily eroded by rivals, including rivals HelloFresh — which is profitable — and Sunbasket. Blue Apron’s sales of $470mn in 2021 are nearly half that of 2017, when it listed.
This week’s first quarter result only confirmed the trend as losses continued. Customer numbers have climbed a bit and revenue per order rose by nearly a fifth year on year, but acquiring customers chews up those gains.
That explains why investors have long lost their appetite for the stock. Blue Apron’s market value is less than $110mn, compared with the $1.9bn valuation it fetched shortly after its IPO. It narrowly avoided being delisted in 2019 after pushing through a 1-for-15 reverse stock split.
None of this has put off one investor paying for repeated helpings of Blue Apron equity. RJB Partners said on May 2 it would invest $40mn in a private placement at $12 a share. It has already completed half of its investment, with the rest to be completed on May 30.
The cash infusion looks odd. For one thing, shares in Blue Apron are trading at less than $4. Why pay $12 when the stock can be acquired for a third of the price? Also this is the third private placement RJB has done with Blue Apron. The previous ones — in February and last September — included warrants that gave RJB the right to buy stock in Blue Apron at arranged prices that range from $15 to $20. After both, the share price subsequently fell.
It is not clear what RJB’s motives are. If it perceives such a bright future for Blue Apron, why not just take it private? If it has any positive insider knowledge as Blue Apron’s biggest shareholder with a 20 per cent stake, no good news has come out.
Whatever its reasoning, the shortlived pandemic boost to sales means Blue Apron has to eat more costs to find more customers. That is a recipe for problems.