Weight Watchers Wants to Eat Blue Apron's Lunch

Even the speculative whiff of a buyout isn't enough to get Blue Apron (NYSE: APRN) going these days. The meal-kit provider was one of last week's biggest losers, plunging nearly 15%. The stock took its latest hit despite news that supermarket behemoth Albertsons was acquiring smaller Blue Apron rival Plated, something that more often than not would spark buzz for potential suitors lining up to snag the niche leader.

One big thing holding Blue Apron back from participating in the Plated purchase as a sympathy play is that Weight Watchers (NYSE: WTW) filed a patent application for a delivery service features "smart portions" of fresh food last week. Investors were already concerned that the players already present in this niche are fighting for scraps, and now we're seeing the potential entry of Weight Watchers.

A tale of two equities

Blue Apron and Weight Watchers are leagues apart when it comes to market sentiment. Blue Apron has been a disaster, shedding nearly half of its value since going public at $10 three months ago. Weight Watchers has been one of this year's biggest winners, nearly quadrupling -- up 273% -- so far in 2017.

The turnaround at Weight Watchers has been a thing of beauty. Revenue is on the rise, as its subscriber base has soared by 20% over the past year. It raised its guidance yet again in its latest quarter, contrasting Blue Apron shocking its rookie-year investors by warning that revenue will actually decline during the second half of this year.

Plated going for an exit strategy and Blue Apron's public crumbling would seem to suggest that there isn't money to be made in delivering fresh meal kits, but Weight Watchers has unique advantages. Weight Watchers already has 3.5 million subscribers, giving it cost-effective access to a somewhat-loyal base of calorie counters. The diet-minded brand could also woo new potential customers looking for a healthy meal replacement option. Finally, we can't forget that Oprah Winfrey how has a minority stake in Weight Watchers and serves as its spokesperson. If and when Weight Watchers enters this niche, it will do so with a lot of noise.

Blue Apron is in a funk. Customer churn is problematic, it costs a lot of money to attract new foodies, and revenue is about to start going the wrong way. It was already gearing up to compete against the country's largest online retailer and now it will likely have to deal with the Winfrey-fueled mauler that Weight Watchers has become. Blue Apron can't catch a break, and we're getting to the point where a buyout may be its best way out of this mess.

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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.