Some meals are harder to piece together than others, and the same can be said about broken IPOs. Shares of Blue Apron (NYSE: APRN) have been in a world of hurt since the company went public two months ago, tumbling another 12.4% last week after Blue Apron posted disappointing financial results. Several analysts lowered their ratings on the stock and slashed their price targets following the report.
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Blue Apron's revenue climbed 18% to $238.1 million in the second quarter, and its adjusted deficit of $0.47 a share was far worse than the $0.30 analysts were targeting. Blue Apron's guidance was even more troublesome. The leading online provider of gourmet meal kits is eyeing $380 million to $400 million on the top line during the final two quarters of this year combined, less than the $421.4 million it served up during the second half of 2016.
Coming back for seconds
Shares of Blue Apron have now been slashed nearly in half, down 49% since the company went public at $10 in late June. A sharp sell-off this summer may seem like a dinner bell for opportunistic investors, but Wall Street pros aren't seeing it that way.
Several analysts talked down their prospects. SunTrust, Citi, and Oppenheimer all downgraded. An even larger list -- Needham, RBC Capital, Canaccord, SunTrust, and Citi -- slashed their price targets.
Mark May at Citi lowered his rating on Blue Apron stock from "buy" to "neutral," arguing that execution issues open the door for competitors. He's shaving his price target from $10 to $5.50, but he does pose a buyout scenario in which a large retailer snaps up Blue Apron to scale quickly in this niche.
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Jason Helfstein at Oppenheimer is going from "outperform" to "perform," sensing that desperation is starting to sink in at Blue Apron as it shifts from growth to capital preservation. The unattractiveness of Blue Apron as an investment will make it harder to raise new capital, likely limiting what the unprofitable company can spend on marketing in the future to drum up new foodies.
Finally, we have Youssef Squali at SunTrust lowering his call from "buy" to "hold." He sees Blue Apron's disappointing guidance -- which also includes a net loss of $121 million to $128 million during the second half of this year -- as an investor deterrent. Blue Apron's lack of visibility on a potential turnaround and lingering cost and customer acquisition issues should hold the stock back in the near term.
Blue Apron's first quarter as a public company was a disaster. It can't afford to make the same mistake the second time around.
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