Why Blue Apron Runs Higher This Week

What happened

Shares of blue apron bottoms (NYSE: APRN) climbed 17.7% this week from their close last Friday, according to data from S&P Global Market Intelligence, on no specific news that would explain such a big rise, although it has named a new director to its advisory board. administration and the meal kit company said it would come out with breakfast options.

At just under $5 a share, Blue Apron has lost nearly all of its value since its IPO in 2017 as meal kits have become commoditized, competition from supermarkets, big box stores and d ‘other vendors having destroyed all the market advantages it once held.

Image source: Getty Images.

So what

Blue Apron got some breathing room during the pandemic as lockdown orders forced consumers to turn to meal delivery outfits for food. But once the economy reopened, she started losing customers again.

In its fourth quarter earnings report last month, Blue Apron reported 336,000 customers, down 15% from the pandemic peak of 396,000 customers reached in the months following the outbreak.

It seems that the customers he has retained like the service, as Blue Apron also reported that even though the number of orders taken decreased during the quarter, the average order value increased and the revenue generated by each customer increased. increase.

Blue Apron vacillated between spending tens of millions of dollars to attract new customers and accepting the fact that it will only be a small niche food delivery stock, only to believe once again that it can develop its base.

Now what

Adding a breakfast menu might actually be a smart move for the meal kit maker, as it says 35% of its customers have requested such items. The selection is varied and looks tasty, but whether that’s enough to keep customers subscribed remains to be seen.

The addition of popular diet options along with other add-ons and collaborations failed to bring back enough subscribers. This just underscores the fact that a meal kit delivery business is difficult to achieve because, especially in an inflationary environment, service is an expensive luxury that can be easily waived to save money.

Beverly Carmichael’s appointment to the Board of Directors brings a strong restaurant background to Blue Apron having held senior positions at Red Robin Gourmet Burgers and Cracker Barrel Old Country Store.

It’s a lot to ask of a person to turn around a company, not to mention one who only acts as an administrator and not in a day-to-day management function in the company.

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Rich Duprey has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.

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