- Shares of meal-kit delivery service Blue Apron sank after Morgan Stanley slashed its price target to $6 from $21.
- The downgrade came after a recent 1-for-15 reverse stock split did little to boost Blue Apron shares, now trading at an all-time low of $6.58.
- The company has struggled since its IPO in mid-2017.
- Watch Blue Apron trade on Markets Insider.
A popular meal-kit service may not be delivering for much longer.
Shares of Blue Apron tumbled as much as than 4% to an all-time low of $6.46 on Tuesday after Morgan Stanley lowered its price target on the stock to $6 from $21 — a more than 70% cut.
The lowered price target comes amid expectations for the continued deterioration of customer growth. Blue Apron has consistently lost market share as new online meal kits such as HelloFresh — the current leader — launch to customers, Morgan Stanley said. Further, the firm noted that unique downloads of Blue Apron’s app continue to fall, along with its share of new app downloads.
Without new customers, it’s unclear that Blue Apron can turn a profit, Morgan Stanley wrote.
With that said, the analysts do see a path towards improvement for Blue Apron. It said that increasing meal-kit choices, shortening prep times, and offering higher quality meats could help bring back customers and brighten their outlook on the company. But, they could become even more cautious if they see ontinued customer churn and execution challenges from the company.
Morgan Stanley’s slashed price target comes just days after the company did a 1-for-15 reverse stock split in order to get its share price above $1 — a threshold that’s crucial for a company to stay listed on major exchanges. The stock started trading under the reverse split on June 17, and shares have continued hit a series of record lows in the period since.
The once-trendy meal-kit service has struggled since going public in mid-2017. In fact, its troubles began mounting the week it was supposed to price its IPO, when Amazon shelled out $13.7 billion to buy Whole Foods — a move viewed as adding considerable competition to the food-delivery space. Blue Apron ended up cutting its IPO range by roughly 40%.
And it’s been mostly downhill since then, with the company losing roughly 90% of its initial value.
Blue Apron replaced its CEO shortly after its difficult IPO process, and has struggled to maintain market share and convince customers to use its product continuously. Customer complaints about price, meal flexibility and the difficulty of recipes provided have not been sufficiently addressed by the company.
Shares of Blue Apron are down more than 50% year-to-date.
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