Not a good sign... Blue Apron just completed a "reverse stock split" — It's combining 15 (really tiny) Blue Apron shares into 1 (way more reasonably sized) share. That financial engineering boosted the stock price from $0.55 to over $8 in one day. The struggling meal kit pioneer pulled off the maneuver for two key reasons:
- Psychological messing: Seeing the stock fall from its $10 IPO price down to $1 in less than two years was depressing. And when potential investors check and see the stock's under a buck, it sends a bad signal.
- The minor leagues: The New York Stock Exchange may actually de-list stocks that are less than $1. If they stay below that price for too long, the stock is relegated down to the "Over the Counter" markets.
Blue Apron warned us this could happen... When Blue Apron prepped to become the first publicly traded company focused on zucchini-wrapped salmon entrées for your night in, it was honest with investors about the risks it faced. Here are three top concerns the company listed in its pre-IPO S-1 document, all of which have come true:
- “We have a history of losses, and we may be unable to achieve or sustain profitability.” That first profit champagne is still in the fridge.
- “If we fail to cost-effectively acquire new customers or retain our existing customers... our business could be materially adversely affected.” Customers haven't been loyal.
- "If we fail to manage future growth effectively, our business could be materially adversely affected.” Competition is everywhere.
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