Calling a Bottom on Blue Apron Stock Is Dangerous

Gladys Abbott
July 17, 2017

Maybe there's an interest in getting Blue Apron down to a low enough valuation that Amazon can just scoop it up for cheap (unlikely what with the vast majority of Blue Apron subscribers likely already being Prime members and Amazon being notoriously disinterested in such acquisitions).

Amazon already poses a major threat to the grocery industry, with plans to acquire supermarket chain Whole Foods.

Blue Apron Holdings Inc. shares were down 7.7% in Monday premarket trading after Amazon.com Inc. filed a trademark for a meal kit service. This service will provide customers "prepared food kits. ready for cooking and assembly as a meal", according to Amazon's trademark application, which was filed on July 6. "You be the chef." - leaves little question about the market that the e-tail juggernaut is gunning for here.

Since its initial public offering, though, shares of Blue Apron have tumbled. The filing has the word mark "We do the prep". Blue Apron had to settle for $10, and that may still have been too high. It now sits roughly 34% below its IPO price of $10 a share.

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Amazon is a model buster.

Blue Apron isn't the only company in this market, but it was establishing itself as the top brand. However, its slowing growth with revenue up a more modest 42% in this year's freshman quarter and its lack of profitability make it vulnerable if Amazon should dive in sooner rather than later with an aggressively priced knockoff. Once the Whole Foods deal goes through, it'll have a strong grocery backbone to plant a stake.

While Blue Apron is perhaps the most extreme example, its plight highlights the unfortunate reality facing many companies in the retail industry: Amazon is coming, and there's nowhere to hide.

Representatives from Amazon and Blue Apron didn't immediately respond to CNBC's request for comment.

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