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Why Blue Apron Holding Inc Stock Got Crushed Today

A mix of kitchen utensils and recipe ingredients spread over a counter

What happened

The stars of the business world continued to align against Blue Apron Holding Inc (NYSE: APRN) today. Just days after Walmart said it would begin offering meal kits in its stores, Weight Watchers (NYSE: WTW) now plans to offer its own pre-packaged meals that will be sold in grocery stores.

Blue Apron shares slid over the course of the day on the news, trading down 15.5% as of 3:26 p.m. EST.

A mix of kitchen utensils and recipe ingredients spread over a counter

Image source: Blue Apron.

So what

In an attempt to leverage a surge in its membership, Weight Watchers is launching the new "quick-prep" kits to add another revenue stream. The move by the weight-loss specialist, which is known for selling branded products in grocery stores, is the latest evidence that meal kits are becoming commodity items with little customer loyalty. Once they're readily available in grocery stores, customers can avoid the need to order them in advance. Also today, shares of Kroger , the nation's largest traditional supermarket chain, dove as the company posted weak earnings guidance for 2018, a further sign of increasing industry competition.

Now what

Blue Apron CEO Brad Dickerson recently said he believed that customer acquisition costs were only going to get more expensive as more competitors enter the field, and this week's developments underscore that likelihood. Blue Apron stock was approaching $2 a share at the end of the session, 80% below its IPO price last June. The market seems to have little faith that it can turn its business around.

The company's best bet may be to partner with a larger supermarket chain or consider selling itself, as revenue growth has slowed significantly and the company is losing money.

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Jeremy Bowman owns shares of Kroger. The Motley Fool is short shares of Kroger. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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