Wondering if APRN stock is for you? Well, let's weigh the pros and cons.
5 Reasons NOT to Buy Blue Apron Stock
1) Originally, Blue Apron said it would aim to sell shares to new investors at a valuation of $3.2 billion, but revised that down on Wednesday to around $2 billion. The big reduction almost certainly reflects a lack of investor demand at the higher valuation.
2) Its marketing costs as a proportion of revenue keep climbing (the opposite of what should occur as a company’s scale increases due to, among other things, greater brand awareness). Related to that point is its difficulty in keeping customers: about two-thirds stop ordering within six months.
3) Most companies target at least a 20 percent “pop” on the first day of trading to kick off their public debut on good terms. The lowering of the offering price combined with the lackluster first day of trading is a bad indicator.
4) If Amazon “disrupts” that market like it has other markets (especially after it bought out Whole Foods), it could be a very challenging environment. Amazon already has a small meal-kit business, delivering ingredients and recipes to customers in a handful of U.S. cities.
5) With a market cap of just below $2 billion, this is a disappointment for the investors who gave the company a $2 billion valuation at the last private round.
5 Reasons to BUY Blue Apron Stock
1) The company's growth has been undeniable, with its revenue surging from just $77.8 million in 2014 to $795.4 million last year.
2) Although their CAC is about $90, each customer on average orders $57.23 worth of food each quarter.
3) Between 2017 and 2020, Blue Apron expects the segment to grow by 8.5% on a compound annual basis.
4) Moreover, the stock now is quite a bit cheaper. Originally, it was going to sell for $15 to $17 per share, now at $10, it may be a good time to grab some.
5) It's been getting its costs under control, an important indicator of future success since you can't rely on investors to fuel your growth forever. It's also got a very young customer base, which means lots of room to keep growing.
So, do you think Blue Apron will simmer?