Investors didn’t like what they heard in Blue Apron’s first earnings report as a public company. Its stock tumbled nearly 18 percent.
Less than two months after going public, Blue Apron Holdings shares have fallen almost 50 percent to about $5 — less than the price of one of its meals — as the company struggles to persuade investors that it can win the hearts of America’s cooks.
In its first earnings report as a public company, Blue Apron managed to beat analysts’ estimates with quarterly revenue of $238.1 million, but that was the only good news. The company said it didn’t raise as much as it expected in the IPO and also cut deeply into its marketing budget. The result: It lost customers during the quarter and posted a loss of $31.6 million.
In a conference call, Blue Apron executives warned that the second half will be even worse than the first as the company spends heavily on automating its fulfillment centers and continues to pull back marketing. That in turn will push back plans to expand menu offerings.
The company said sales in the second half will be $380 million to $400 million — implying that Blue Apron won’t reach more than $1 billion this year, a milestone many had expected. A new facility in Linden, New Jersey, has been slow to get up to speed, and training workers on new processes and more automated technology has taken longer than expected, said Chief Financial Officer Brad Dickerson.
Investors didn’t like what they heard and sent the shares down nearly 18 percent to $5.14 Thursday.
“We were clearly wrong in our estimate of the logistical challenges of this transition and its ability to re-accelerate customer growth and engagement,” Heath Terry, an analyst at Goldman Sachs Group — the lead underwriter of Blue Apron’s IPO — wrote in a note to clients. He downgraded the stock. “Until management proves it can solve these operational issues, we see little opportunity for outperformance.”
Blue Apron, which sells boxes packed with fresh ingredients and recipe cards to make dinner at home, had been spending heavily on marketing to educate consumers on the concept and distinguish itself from dozens of rivals.
In the second quarter, however, Blue Apron said it cut its marketing spending by 43 percent from the first. That resulted in a net decrease in the total number of customers and orders. Blue Apron had 943,000 customers at the end of June, down about 9 percent from…