Citi analyst Mark May downgraded Blue Apron Holdings Inc APRN to Neutral, like other analysts citing the IPO’s disappointing quarterly results due to issues with the opening of a new fulfillment center.
Opening For The Competition Or Ripe For An Acquisition?
“Because of these issues, management plans to lower its marketing spend by ~30% y/y in order to manage order growth and customer satisfaction. 2H17 revenue is forecasted to decline y/y and adj. EBITDA losses are expected to increase,” he said. “These execution issues not only introduce new risks to the outlook (e.g., future expansion needs, damage to brand/customer satisfaction, etc.), but also potentially create an opening for the competition."
He also downgraded the target price to $5.50. “We see the biggest risk to our downgrade as being an acquisition of APRN by a large retailer looking to compete with Amazon.com, Inc. AMZN,” he said.
Blue Apron’s opening price when it went public in June was $10. It closed at $5.09 on Thursday.
Related Link: Goldman Sachs Downgrades Blue Apron
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