Why Blue Apron Holding Inc Stock Got Crushed Today

MarketsMotley Fool

What happened

The stars of the business world continued to align against Blue Apron Holding Inc (NYSE: APRN) today. Just days after Walmart said it would begin offering meal kits in its stores, Weight Watchers (NYSE: WTW) now plans to offer its own pre-packaged meals that will be sold in grocery stores.

Continue Reading Below

Blue Apron shares slid over the course of the day on the news, trading down 15.5% as of 3:26 p.m. EST.

So what

In an attempt to leverage a surge in its membership, Weight Watchers is launching the new "quick-prep" kits to add another revenue stream. The move by the weight-loss specialist, which is known for selling branded products in grocery stores, is the latest evidence that meal kits are becoming commodity items with little customer loyalty. Once they're readily available in grocery stores, customers can avoid the need to order them in advance. Also today, shares of Kroger, the nation's largest traditional supermarket chain, dove as the company posted weak earnings guidance for 2018, a further sign of increasing industry competition.

Now what

Blue Apron CEO Brad Dickerson recently said he believed that customer acquisition costs were only going to get more expensive as more competitors enter the field, and this week's developments underscore that likelihood. Blue Apron stock was approaching $2 a share at the end of the session, 80% below its IPO price last June. The market seems to have little faith that it can turn its business around.

The company's best bet may be to partner with a larger supermarket chain or consider selling itself, as revenue growth has slowed significantly and the company is losing money.

10 stocks we like better than Blue Apron Holdings, Inc.When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Blue Apron Holdings, Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of March 5, 2018

Jeremy Bowman owns shares of Kroger. The Motley Fool is short shares of Kroger. The Motley Fool has a disclosure policy.