Dive Brief:
- Stock in Blue Apron Holdings fell to a new low of $5.83 last Friday after the meal kit company announced plans to relocate its Jersey City fulfillment center to Linden, New Jersey, resulting in the elimination or relocation of roughly 25% of its current workforce, The Wall Street Journal reported last week.
- Approximately 1,270 jobs at the Jersey City facility will be eliminated by October, though 800 workers have committed to moving with the company to Linden.
- Since its IPO on June 29, the company has faced falling stock prices, uneasy investors, and growing competition, largely from Amazon.com, which not only indicated interest in starting a meal kit service of its own but which also purchased Whole Foods on June 16, preceding Blue Apron's IPO by less than two weeks.
Dive Insight:
Although the company generated between $750 million and $1 billion in 2016, Blue Apron also suffered losses of $54.9 million in 2016. Then, in the first quarter of 2017, the company racked up a net loss totaling $52.2 million —almost as much as all of 2016's losses. Though Blue Apron went public in June at $10.01 per share, recent closing prices reflect losses of at least 36% or more. That puts it well below the prices investment bankers suggested in order to generate interest among investors.
Since its launch, Blue Apron has struggled with supply chain efficiency, raising prices to cover shipping costs and tackle the last mile challenge. The problem is, Blue Apron needs to run an extremely efficient warehouse, packaging and distribution system if it wants to keep operating costs down and turn a profit. But Blue Apron has struggled to manage its supply chain since the company began, and investors are growing impatient.
The resulting disenchantment is having a serious effect on the startup market, as entrepreneurs and investors are beginning to doubt the high valuation of many private companies. Investors are starting to express skepticism regarding highly valued private companies, because if they can't hold up after going public, like Blue Apron, then private valuations must not be that reliable.
