Coverage: Blue Apron stock falls on higher expenses
Shares of Blue Apron plunged Thursday after the meal-kit delivery company said during its earnings call that it was encountering unexpected costs tied to starting up a new facility.
Sarah Whitten of CNBC.com had the news:
These costs, as well as further cuts in marketing spending, will likely result in more losses in the second half of the year.
Blue Apron now estimates that its net loss will be between $121 million and $128 million in the second half while net revenue will fall between $380 million and $400 million.
The stock opened trading Thursday down 17 percent.
Earlier Thursday, Blue Apron reported a steep second-quarter loss as the company spends heavily to recruit new customers.
Although the number of customers rose 23 percent year over year, the company said its client base shrank by 9 percent from the first quarter due to a planned $26.1 million reduction in marketing expenses.
Rex Crum of the San Jose Mercury News reported that Blue Apron has other problems:
Blue Apron said it suffered delays in launching new products, and the company is facing more competition on all fronts: from similar subscription-based delivery companies, grocery stores that are offering prepared meal kits, and the likes of Amazon with its massive, quick distribution network.
Blue Apron was able to put a feather in its cap by saying it grew its subscriber base, with 943,000 people ordering its meal kits in the quarter — a 23 percent gain from a year ago.
But such companies rely on increasing sales from customers to help cover the costs of items like expansion and the addition of new menu items. And in Blue Apron’s case, the company averaged $251 per customer during the quarter, down from $264 in the same period last year.
And with Thursday’s losses, Blue Apron’s shares are down by 48.6 percent since the company went public at $10 a share barely two months ago. With as many black eyes as it has taken, Blue Apron may be feeling blue for some time to come.
Matthew Lynley of TechCrunch reported that Blue Apron’s problems haven’t stopped potential service IPOs:
The company gave off some negative signals about its next quarter, forecasting a loss between $121 million and $128 million in the second half, according to Business Insider. These comments were likely made on the earnings call, which we’re reviewing right now. But those kinds of negative signals are going to punish a freshly-IPO’d company, especially amid a period of wild uncertainty with the decline of Snap and possible fading appetite for new IPOs.
If Blue Apron sees some turbulence heading into the back half of the year, the persistent threat of Amazon definitely isn’t going to help. Information is slowly dripping out that Amazon is gunning for the meal-kit delivery space, which has crushed the stock over time. The company went public at $10 per share, but has since collapsed and lost nearly half its value.
Still, the IPOs will continue to come. Dropbox is reportedly inching closer to an IPO, and TechCrunch previously reported that Stitch Fix has confidentially filed for an IPO.