There might have been a degree of excitement around meal kit company Blue Apron (NYSE:APRN) when it had its IPO in 2017, but things have not panned out well.
The stock has performed miserably due to the company’s problems with profitability and survived from delisting by a reverse split. Post adjustments, the stock has lost 97% since its listing. However, it trades at only 0.2 times its sales, which is why it might be worthwhile to figure out if there is any value in the stock.
The appointment of Linda Kozlowski has been one of the major reasons why Blue Apron has managed to turn its fortunes around somewhat. Instead of chasing the customers that the company was losing, Kozlowski focused on stabilizing the business and raising revenues from each existing customer so that Blue Apron could be right sized.
In Q2 2020, Blue Apron’s revenues rose and in the very next quarter, the losses decelerated as well. The company’s strategy to focus on higher spending customers seems to have worked. On top of that, the coronavirus pandemic and the associated lockdowns also boosted orders considerably.
Orders per customer in Q3 2020 stood at 5.4, which is an improvement from 4.5 orders placed by each customer in the year-ago period. Revenues per customer grew by as much as 22% year on year in the third quarter as well.
The mild turnaround in the company’s fortunes is not only due to the growth in revenues from each customer. Kozlowski cut back Blue Apron’s spending considerably as well and it started with marketing expenses.
In addition to that, certain operational alterations were made as well, which eventually helped Blue Apron in reducing adjusted EBITDA losses as well as net losses.
Adjusted EBITDA losses in Q3 2020 came in at $4.7 million, which is considerably lower than $13.2 million in the year-ago period.
While the turnaround has been a cause for optimism, it is also important to keep in mind that Blue Apron’s competitors are faring much better.
The company’s major rival HelloFresh has seen a year-on-year surge of 92% inactive customers in the third quarter. On top of that, total orders jumped to 19.5 million, which reflects year on year growth of a whopping 114%.
Blue Apron, on the other hand, had to issue fresh stock in order to refinance its debts. Moreover, it remains to be seen if the orders stay at the same level once the pandemic is over. That being said, the company seemed dead and buried a year ago. Things have changed considerably recently.
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