Analyst: Blue Apron Downgrade Makes It Ripe For Acquisition

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