Blue Apron Holdings’ (APRN) disappointing second-quarter results sent investors scurrying, leading to a 24.4% drop in its stock price on August 2. This brings the stock’s YTD (year-to-date) loss to 54.6% for the beleaguered meal kit provider. Compared with its IPO price of $10.00, APRN stock was down 81.7% to $1.83 on August 2. The company started trading on June 29, 2017.
Blue Apron’s (APRN) second-quarter net revenues of $179.6 million came in short of the consensus estimate of $188.5 million and declined 25.0% on a YoY (year-over-year) basis. Sequentially, its revenues fell 9.0%. The company attributed this decline to seasonal trends.
Blue Apron had reduced its marketing expenses as the company diverted resources to speed up the operations at its Linden fulfillment center, leading to a loss of customers. Although the company’s management accelerated its marketing spending in December 2017, its customer base declined 24.0% YoY for two consecutive quarters of decreases.
Investors remain wary, as the company has suggested that its revenues would need more time to return to growth than it had earlier anticipated. Its third and fourth quarters are expected to report decreases in revenue.
Also, competition is becoming a major concern as the meal kit arena now features several big players like Amazon (AMZN) and Kroger (KR), as well as other small players like HelloFresh and Marley Spoon. Amazon’s acquisition of Whole Foods is expected to emerge as a disruptive factor in the meal kit space.
All these factors are keeping analysts on the sidelines. Of the 15 analysts covering APRN stock, 80.0% recommended a “hold” and 20.0% recommended a “buy.”
Two analysts revised their price targets for APRN stock after its earnings release. RBC lowered the price target to $2.00 from $4.00. SunTrust Robinson slashed its target price to $2.00 from $2.70. Currently, the analysts’ 12-month average target price for the company is $2.87, which reflects a 56.8% upside to Blue Apron’s stock price on August 2.