Analyst: Blue Apron Downgrade Makes It Ripe For Acquisition

Citi analyst Mark May downgraded Blue Apron Holdings Inc (NYSE: APRN) to Neutral, like other analysts citing the IPO’s disappointing quarterly results due to issues with the opening of a new fulfillment center.

Opening For The Competition Or Ripe For An Acquisition?

“Because of these issues, management plans to lower its marketing spend by ~30% y/y in order to manage order growth and customer satisfaction. 2H17 revenue is forecasted to decline y/y and adj. EBITDA losses are expected to increase,” he said. “These execution issues not only introduce new risks to the outlook (e.g., future expansion needs, damage to brand/customer satisfaction, etc.), but also potentially create an opening for the competition."

He also downgraded the target price to $5.50. “We see the biggest risk to our downgrade as being an acquisition of APRN by a large retailer looking to compete with Amazon.com, Inc. (NASDAQ: AMZN),” he said.

Blue Apron’s opening price when it went public in June was $10. It closed at $5.09 on Thursday.

Related Link: Goldman Sachs Downgrades Blue Apron