Blue Apron Stock Forecast: Blue Apron Inc. [NYSE: APRN] is an American ingredient-and-recipe meal kit service that delivers fresh ingredients and recipes to make meals for homes.
Its weekly boxes contain ingredients and cooking techniques to prepare meals which are sent along with fresh, seasonal ingredients. And Blue Apron meals are accompanied by printed and digital content, including suggested recipes along with stories of its suppliers and specialty ingredients.
The grocery delivery company sources, processes, stores and packages pre-measured meal ingredients such as fresh meat, fish, herbs, vegetables, and fruits in refrigerated boxes and ships them directly to consumers to prepare meals at home.
Blue Apron offers its customers two flexible subscription plans: a two person plan and a family plan.
The company also offers Blue Apron Wine, a direct-to-consumer wine delivery service that sells wines. In addition, the company sells grass-fed beef, pasture-raised poultry, and lamb products under the BN Ranch brand name.
Another string to the bow is Blue Apron Market, an e-commerce marketplace, which sells cooking tools, utensils, and pantry items.
The meal-kit company founded in 2012 and headquartered in New York went public in June 2017.
Is Blue Apron Stock A Buy?
Blue Apron [NYSE: APRN] reported wider-than-expected losses and a revenue miss in its recently posted third-quarter earnings. The meal-kit maker reported a third-quarter loss of $26.2 million, or $1.99 per share, after a loss of $33.9 million, or $2.64 per share, last year.
Dismal results posted by the meal-kit subscription company could have sent the stocks into a tailspin, but investors gathered hope from a couple of silver linings visible in the dark ominous clouds.
Blue Apron is far away from profitability with the number of orders in a free fall, declining to about 1.73 million from 2.65 million last year. However, on the positive side, its average order value rose 1% annually to $57.60 from $56.79, and its average orders per customer increased to $258 from $233 in 2018, an upswing of over 10%. The numbers carry a hint of optimism, suggesting that the Blue Apron’s revenue could again go northwards if it is successful in arresting its customer exodus.
Adding further to the positivity was the survey conducted by Clutch, which revealed the company’s pet food service Barkbox to be the third most popular subscription box service in America, and the top meal kit service. The survey affirmed Blue Apron’s hold in the segment with respect to its competitors, and reaffirmed that the company is on a strong footing vis-à-vis competing meal kits from Walmart and Kroger, among others.
It also makes the meal-kit maker a lucrative acquisition prospect for these grocery behemoths. After all, an enterprise value of about $180 million sounds too good an opportunity to pass to acquire a company which could give you a market-leading position in the meal kit race.
The company’s new CEO Linda Findley Kozlowski’s focus on cutting costs is also shoring up the numbers, providing another flicker of hope for the customers. The former chief operating officer of Etsy seems qualified enough to help Blue Apron continue its turnaround efforts with the meal-kit provider bringing down its adjusted EBITDA loss from $18.8 million to $13.2 million.
The business also witnessed improvement in negative free cash flow, which narrowed to negative $8.9 million from negative $18.6 million a year earlier. The company also managed to considerably trim its long-term debt, which now stands at $54.3 million from $82.6 million at the end of 2018. Also, Blue Apron’s new strategy of focusing on higher quality customers, (quality over quantity), “focused expansion to new customer segments,” “more menu choices and flexibility,” and “efficient” marketing efforts could lead it on a path of profitable growth.
What Are The Risks of Buying Blue Apron?
Albertson’s, the nation’s second-biggest traditional supermarket chain, recently disclosed its intentions of phasing out its Plated subscription meal service by the end of November. Albertson’s intends to beef up its in-house culinary brand Own Brands in place of the meal-kit subscription business which it acquired in 2017 for an estimated $200 million.
The latest news from Albertson’s just reinforced investors’ fears that the meal-kit subscription business has run its course. Following a disappointing third-quarter earnings report, the news from Albertson’s is just the latest ominous sign that the meal-kit bubble has burst. Quarterly revenue of Blue Apron nosedived 34% annually to $99.5 million, down from $150.6 million in the same period last year, missing estimates of $107.0 million by $7.4 million.
Blue Apron has been losing customers at an alarming rate. Entry of new competitors and feeling among the customers that they were being overcharged for groceries packed in fancy boxes have made them look elsewhere. Also, time-constrained consumers have a simple alternative of ordering cooked meal online.
Blue Apron has had three CEOs in two years, which attests to the turmoil the meal-kit maker is facing. Its newest CEO Linda Findley Kozlowski (Etsy’s former chief operating officer) took over the company’s reins earlier this year. However, despite her best efforts, Kozlowski is yet to arrest Blue Apron’s rapidly declining customers, orders, and revenue.
Facing declining orders and revenue, Blue Apron has also cut down its marketing expenses by over 45%. Kozlowski defended the move, claiming the strategy would help bring down the cost while at the same time allow it to concentrate on “high affinity” customers. Critics argue that such a move could prevent the business from acquiring new customers.
Blue Apron lost over 40% customers annually to 3, 86,000 during the third quarter, and the speculation is that the worst is still not over. Analysts expect the revenue to slide over 30% this year.
There are no signs yet on the horizon of a possible acquisition of Blue Apron, and the company is now worth less than $100 million.
Blue Apron shares are down nearly 67% over the past year and after more than two years of declining revenue and customer loss, a full-on comeback looks a tad optimistic.
Blue Apron Stock Forecast Summary
Blue Apron is showing faint signs of recovery under Kozlowski, but its weaknesses still outstrip its strengths by a fair margin. A rapidly shrinking customer base, lackluster growth in average revenue per customer, dwindling marketing budget and unclear turnaround plans make the company vulnerable to ward off challenges from rivals like Hello Fresh.
All in all, Blue Apron remains a risky investment unless the company narrows its losses and grows its customer base.
Analysts’ 12-month price forecasts for Blue Apron Holdings Inc. range from $6.00 to $9.00. On an average, they anticipate Blue Apron’s stock price to reach $8.00 in the next year, which represents a +15.94% increase from its last closing price.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.