Why Shares of Blue Apron Holdings Continue to Get Crushed

MarketsMotley Fool

What happened

When it rains it pours, and Blue Apron Holdings, Inc. (NYSE: APRN) has had a downpour of bad news after its recent initial public offering. Today, news of e-commerce juggernaut Amazon.com (NASDAQ: AMZN) filing for a prepared food kit trademark application was enough to send shares of Blue Apron down 10% as of 11:30 a.m. EDT.

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So what

This is just the most recent development for the company, which had previously anticipated going public for between $15 and $17 per share, before recalculating that to $10 for its official opening. Blue Apron now trades at around $6.60, and its future remains highly speculative after Amazon filed a trademark for "prepared food kits composed of meat, poultry, fish, seafood, fruit and/or vegetables... ready for cooking and assembly as a meal." When you combine that with slowing revenue growth, dismal customer retention rates, contracting margins, and rising expenses, Blue Apron becomes a high-risk stock for investors' money.

Now what

While the market was quick to send shares of Blue Apron lower Monday morning, tech companies file a plethora of trademark applications that don't always lead to actual services. That said, with Amazon's recent acquisition of Whole Foods Market (NASDAQ: WFM), it's difficult for investors to simply shrug this trademark off. It seems like the next logical step for Amazon's grocery ambitions, and this all points to the fact that Blue Apron doesn't own a competitive advantage in an industry with low barriers to entry -- not something investors are looking for.

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John Mackey, CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. Daniel Miller has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Whole Foods Market. The Motley Fool has a disclosure policy.