
Blue Apron becomes a penny stock, trading under $1 for the first time - pseudolus
https://markets.businessinsider.com/news/stocks/blue-apron-stock-price-tumbles-below-1-first-time-2018-12-1027818501
======
goldcd
Always seemed a strange business model. Appealing to people who "want to
cook", but doing so by turning yourself into a production-line assembler. Like
saying your want to learn carpentry, by buying some Ikea flat-pack.

What confused me (and makes me think I've overlooked something) is why nothing
more interesting has come along from the supermarkets. In the UK at least,
they're all online and deliver - but they all seem to stick to "buy your
ingredients and we'll deliver them". I'd quite enjoy one that let you browse
recipes and would stick all the ingredients in your basket - but then added
some intelligence. e.g. You add the "roast chicken weekend meal" to your cart,
and it asks "are you going to eat all that chicken?" For £5 extra would you
like to add some bacon, creme-fraiche, tarragon, frozen-pastry & peas to
enable you to make a lovely pie on Monday? Or asks "what's in your fridge" \-
here are some recipes and prices for things to use it up? Could even add some
intelligence - I don't like mushrooms, so when recommending a chicken pie and
providing a recipe, switches something else into my basket & recipe (leeks are
lovely). Or would further adjust the recipe - you said you needed to feed 8 at
the weekend, so I picked the larger lump of meat, and have adjusted the
cooking time in the recipe. Or "Do you own a pressure cooker, a freezer and
have 2 hours free this weekend to batch cook some chilli" Or... basically Blue
Apron and the rest seem to be trying to solve a real problem, completely the
wrong way.

~~~
djhworld
I think the biggest problem for me as a single person is the way most stuff
sold in supermarkets is designed for family meals. Which is fair, families
probably represent a significant portion of their customer base.

But it becomes problematic for me because I either have to eat the same meal 4
days in a row (or freeze it) or only use half of the ingredients and shove the
rest in the cupboard, or throw it away because its perishable

I wouldn't mind a service that works out a set of meals you can make for the
week that makes the best use of ingredients (minimises waste) and brings some
variety.

I suspect the economics don't work out on it though

~~~
asdff
Some perishables like fruits and vegetables are terrible to buy. Cilantro
comes in a massive bunch from which I take three sprigs, and its rotten in a
couple days. Bananas are unedible until day 2, then I have maybe a 3-day
window to eat all the bananas before they are flabby, brown, and mushy. Even
if I throw a handful of arugula in every single one of my meals, its massive
tub is barely half empty by the time it starts rotting in my fridge a week
after purchase.

Even if I plot and plan to use all my cilantro in 3 days, all my arugula in 1
week, power through 3 bananas a day during my bunch's window of opportunity, I
can still end up going out for dinner which throws everything out of schedule.
Or maybe I forgot to pull out the chicken out of the freezer and into the
marinade this morning, so there is now no point in cooking if I need to wait
2+ hours after I get home for my bird to thaw and flavor.

~~~
ghaff
As someone who often cooks for myself, bananas are a pretty terrible example
because you can literally buy one banana if you want. Perhaps I've been
violating a taboo all my life, but I have never had a problem breaking up a
bunch of bananas in the store.

Fresh herbs I agree. It's one reason I tend to grow them. [ADDED: There are
also a lot of frozen and freeze dried options these days that I often take
advantage of.]

There are lots of meats you can pull out of the freezer and put in some water
for 30 minutes or so.

I'm actually sympathetic to your basic point but it's just not something I
find to be a huge problem.

~~~
rpeden
> _I have never had a problem breaking up a bunch of bananas in the store._

Ah, so you're one of _those_ people. Don't you realize you're condemning those
poor banana bunches to an ignominous death in the dumpster? Nobody's going to
buy a bunch with an uneven number on bananas. :(

Being serious though, I don't think you're violating any major taboo. I see
people do the same thing all the time. You're actually performing a public
service for all those people who _want_ fewer bananas but are afraid to split
the bunches themselves.

~~~
ghaff
TIL this was a thing :-) But then I've never been very good about rules.

------
chad_strategic
After 10 years of marriage, my wife thought it would be helpful for me to
start cooking, as she was getting stressed out with our 2 years old.

We used Blue Apron as the starting point.

I can't tell you how much time we save in planning meals and trips to the
store. My wife doesn't have nag me about what I what I want for the week's
dinner. The quality of the food and the time saved is well worth the price. I
know there are some disadvantages about Blue Apron such as waste, carbon food
print etc...

Cooking with Blue Apron is now extremely relaxing for me as I cook and just
tune into NPR or teach my son to cook. Out of 100 meals I would say that we
only had maybe one that was mediocre.

I suspect Blue Apron will survive as it will probably be taken over or bought
out. It's kinda the leader of the pack and the market will eventually
consolidate. It also helps that I might have helped I bought about $1000
discounted gift cards at Costco.

~~~
naravara
>I suspect Blue Apron will survive as it will probably be taken over or bought
out. It's kinda the leader of the pack and the market will eventually
consolidate. It also helps that I might have helped I bought about $1000
discounted gift cards at Costco.

I'm not so sure. Even most people I know who have tried Blue Apron tend to
either regress back to not cooking or they "graduate" to buying their own
ingredients and planning their own meals. It's not like grocery delivery is
that different or hard to do.

I actually think it is pretty great as a way to build the habit of cooking at
home and to get comfortable enough in your kitchen. But it only takes about a
month to do that. Afterwards it's so much cheaper and easier to just handle
the recipes and cooking yourself. Once you get a feel for proportions and
learn some staple recipes Blue Apron adds very little extra value and a lot of
extra headache (no flexibility in the menus, fixed proportions, etc.) So there
isn't much point in doing it.

Also, their vegetarian options too often tend to either be carbs + cheese or
bland vegetables. I'd much rather just make Indian food at home.

~~~
Retric
As long as you have low customer acquisition costs you can still have a large
stable business like this. Look at huggies diapers, some kids spend a lot
longer in diapers than others but generally it’s a short but profitable
window.

~~~
naravara
>As long as you have low customer acquisition costs

Blue Apron doesn't though. And it doesn't seem like they have much luck
lowering their customer acquisition costs. There are a lot more options for
feeding yourself at or below $10 per meal than there are for containing poop.

------
checkdigit15
"Securities traded on a national stock exchange, regardless of price, are
exempt from regulatory designation as a penny stock"[1]

Blue Apron is on the NYSE

[1]"SECURITIES AND EXCHANGE COMMISSION 17 CFR Part 240"
[https://www.sec.gov/rules/final/34-51983.pdf](https://www.sec.gov/rules/final/34-51983.pdf)

~~~
wgerard
NYSE has minimum share price/market cap requirements, so Blue Apron will get
delisted if this continues for more than 29 consecutive trading days.

i.e. It could easily become one.

~~~
rixrax
What happens when/if a company gets de-listed? Search engine gave me below[0]:

"... company basically has two options. It can choose to trade on the Over-
the-Counter Bulletin Board (OTCBB) or the pink sheets system...".

Some more [light] detail in linked 'article'[0].

[0]
[https://www.investopedia.com/ask/answers/05/delistingofshare...](https://www.investopedia.com/ask/answers/05/delistingofsharesowned.asp)

~~~
wgerard
It's a bit more difficult to trade shares, and brokerages will often have
restrictions on trading OTC stocks for retail investors.

It's also just generally a milestone that the company is really not doing
well, so investors tend to sell and recover what they can.

------
ngngngng
I feel like grocery stores could easily compete with blue apron for much lower
costs. Just ration the food they already have in stock in little packages.
Charge a little more than you would otherwise for the employees time picking
recipes and combining them into the packages. I would happily use this service
at local grocery stores. But compared to grocery stores and cooking from
scratch blue apron is too expensive for me.

edit: Blue apron is currently $7.50 - $9.99 per serving. I cook delicious food
for myself regularly for less than $4 per serving if I make enough to have
leftovers for a day or two. It really seems to me that grocery stores could
eat blue apron alive with their lowered costs to provide this same service.

~~~
joshstrange
Some already do this [0] and it's 10000x better than Blue Apron/Plated/Hello
Fresh. Also they don't have the same perverse incentives that BA/P/HF have.
Kroger might make a profit off their meal kits but they aren't 100% reliant on
that revenue, in fact I'd bet they don't really care that much if you but the
meal kit or all the parts of the meal kit because you are still buying it in
their stores.

[0] [https://www.kroger.com/b/preppared](https://www.kroger.com/b/preppared)

~~~
ngngngng
That's really good to hear. I don't have Kroger near me now unfortunately. I
might contact some local grocers and suggest this as I really think this model
of cooking could improve my quality of life significantly.

~~~
joshstrange
My partner and I have used it a few times and if we like a meal I record the
recipe in Paprika (amazing recipe app, really love this app) and we just buy
the ingredients "raw". It means we can adjust portion sizes, plan for
leftovers, and alter the flavor as desired.

------
travelton
I recently subscribed to a different box service, which does all the food prep
work for you (chopping/dicing/slicing, making sauces). It generally takes us
20-30 minutes less to prep, cook and clean over Blue Apron. IMO this is the
main value prop Blue Apron is missing.

For me, Blue Apron is really only solving for time spent looking up a recipe.
In most cases, I'm already going to the grocery store each week. So, where's
the value in spending $80/week? If you can shave off the time I spend in the
kitchen, that's what I want to pay for. I suspect most people subscribe, love
the new recipes they would typically pass over from the internet. And then a
month in realize "I'm not saving any time by doing this... I don't want to
spend an hour or more in the kitchen tonight... Let's just get take out.".

Aside from that, Blue Apron's fulfillment execution is very wonky.
Missing/Bad/Broken ingredients, late boxes (which spoil if not delivered
timely), and excessive packing.

~~~
aakilfernandes
Name of service please?

~~~
travelton
Gobble

------
porpoisely
Thanks to inflation, penny stocks are now stocks that trade under $5.

[https://www.investopedia.com/terms/p/pennystock.asp](https://www.investopedia.com/terms/p/pennystock.asp)

Also, penny stocks tend to be fairly illiquid with very marginal market cap
and tend to trade on OTC/pink sheets and not on major stock exchanges.

So blue apron is penny stockish, but not quite there yet. We'll have to see if
NYSE gives Blue Apron the boot.

~~~
wgerard
The SEC actually has a pretty concrete definition of what a "Penny Stock" is:

[https://www.ecfr.gov/cgi-bin/text-
idx?SID=f4effbf9fb932f767e...](https://www.ecfr.gov/cgi-bin/text-
idx?SID=f4effbf9fb932f767e3e6e2da08418f3&mc=true&node=se17.4.240_13a51_61&rgn=div8)

That being said, there's also the common usage of the term which blue apron
arguably falls under.

------
twblalock
Blue Apron is a perfect example of a company that has no moat. Anyone could
compete with them -- other delivery startups, Amazon, grocery stores, etc.

There is also no obstacle to Blue Apron customers jumping ship to a
competitor. That contributes to making a moat impossible, but it also means
Blue Apron and services like it are probably going to be commoditized and
forced into a race to the bottom on prices, so I wouldn't expect their future
profit margins to be very good.

The only way Blue Apron can differentiate itself is by offering better recipes
and better customer service than its competitors. But their competitors can
easily become equally good at those things.

Overall it's not a good investment because even if the business manages to
survive, it won't be able to make very much money for its shareholders. I
guess you could buy the shares cheap and hope Blue Apron will be acquired.

------
cityzen
Maybe we're seeing now that burning up hundreds of millions in VC cash to try
to acquire users with free meals isn't really a viable business model? After
being annoyed hearing them on every podcast I ever listened to for awhile, I
signed up for the sole purpose of getting free meals, nothing else. I have a
grocery store a mile from my house, I don't need a startup sending me food to
cook. I did enjoy the free meals, though! Thank you VCs!

~~~
t0mas88
The VCs don't mind, they got a great exit at the IPO. It's the employees and
investors in the public markets that eventually paid for your free meals.

~~~
cityzen
Thanks employees and investors in the public market!

------
ghaff
Somewhat OT but do any of these services let you opt into deliveries rather
than opt out? As someone who _might_ consider trying out a few meals now and
then on a week when I'm not traveling/busy, the menus look appealing, etc. I'd
be potentially interested. But I don't want to have to be constantly opting
out and/or canceling my subscription (which I'm sure would get messed up
sooner or later). It really is a dark pattern that makes me even less likely
to use any of these services than I otherwise would.

~~~
marrone12
I haven't used Blue Apron in a couple years but it used to be an opt-out dark
pattern which was supremely frustrating.

~~~
asavadatti
Same with Sun Basket the last time I used them. I would order more if I knew I
had the ability to start/stop/cancel my subscription online

------
apetresc
As someone who's very un-knowledgeable about the stock market - is there
something special about the $1 mark? Isn't it arbitrary how the total market
value of the company is divided into individual shares?

~~~
wgerard
You'll get delisted from the NYSE if you fall below $1/share or below a
certain market cap for more than 30 consecutive trading days.

Being delisted is generally a very bad sign, and it becomes much harder for
shares to get traded.

~~~
planteen
This is correct. To add to this, you will sometimes see companies attempt to
avoid delisting by reverse stock splits (e.g., 10 old shares become 1 new
share).

------
capevace
I once worked for their biggest competitor - HelloFresh - as a door-to-door
salesperson and I have to say... the way we were told to pitch to potential
customers was terrible. We were told to sign up the customer and then then
opt-out of delivery for a period of 5 weeks so the customer forgets that
they’re still subscribed. The salespeople - mostly ~20 year olds - were also
heavily exploited and the wages and commissions not paid. I’m lucky I got out
quick because otherwise they pressure you to stay because most of your
colleagues become your friends and they then peer pressure you...

I’ll assume it’s quite similar to BlueApron... but I don’t know for sure...

~~~
anoncoward111
A sales job will always be one of the easiest ways to get hired in the US, and
also one of the easiest ways to go unpaid and mistreated for a long time.

It's rare than anyone buys from an outbound sales person anymore, especially
when it's not very complex or important.

I'm thoroughly surprised that food service companies would go door to door to
beg for revenue. That is far more desperate than spam emailing,

------
syntaxing
I thought about doing some subscription cooking service before but I recently
joined the New York Times free 6 month trial and I didn't know/expect how
useful their recipe section is. Takes most of the anxiety of choosing what to
cook. For those who know how to cook, I highly recommend trying it out and
following their weekly/daily suggestions. With this and the grocery delivery
services, it doesn't make financial sense to join subscription food services.
Though admittedly, I was taught how to cook at a young age so it's easier for
me to follow the recipes.

~~~
ghaff
The NYT has long had a great food section. I also have a couple generations of
their cookbooks. I understand how some people appreciate the greater structure
of BA and its ilk but, as I wrote elsewhere, it's a pretty narrow use case.

------
Spooky23
Honestly, it's just a lame business model.

It's sort of like when you see the college kid who doesn't know how to do
laundry. It's amusing, but even the most inept and lazy individual doesn't
need alot of time to learn how to fold pants. In the food space, if you have
the money to have pre-packaged groceries fedexed to your home to save time...
why wouldn't you just get takeout?

My wife did a personal chef business with a friend when she got out of school.
They would cook meals for dentists and doctors and deliver it. The most insane
customers even had clean silverware and plates delivered, and one asked paid a
5x markup for them to go to Williams Sonoma and buy a fully outfitted fancy
Thanksgiving dinner, with place settings and all. (ie. "Make it look like the
catalog, please")

Blue Apron appeals to some middle ground of harried people, but the customer
isn't rich enough to pay a wacky markup for burgers and isn't getting enough
done to save a ton of time!

------
albeebe1
While I enjoyed the trial, the food was great, and the freezer packs they ship
with the food have found a new life keeping things in my cooler nice and cold,
i can't say that i'm surprised at all. Cancelling the service required jumping
through numerous hoops, ultimately requiring me to call them to cancel.

------
cde-v
I love Blue Apron but get how they are not exactly profitable. Almost every
single week they leave an item out of my box and the customer support
resolution is to credit my account $40... for like a $3 head of broccoli. I am
not complaining obviously, but yeah, fix the missing ingredients.

------
pwaivers
Hello Fresh is down ~48% since its IPO in July. In that same period, Blue
Apron is down ~70%. Blue Apron is doing even worse than the competitors.

------
yalogin
How well is papa Murphy’s doing? I found it really odd that I get the
ingredients home and then cook again. Now Blue Apron is just making a generic
company out of the papa Murphy model. I don’t find it attractive. When I saw
that they are going public it just felt like a way to cash out of their short
term popularity.

------
thieving_magpie
I stopped using blue apron because I can't stand having a subscription to
everything. I travel with some frequency and it's just a hassle to have to
plan that ahead. All I want to do is order a box for next week without
thinking about when I can cancel again for the following week.

------
GrumpyNl
When the economy goes down, the first thing we stop spending money on is
luxury stuff. See it as a sign.

~~~
vkou
This is a sign, but their entire business model is pretty much dead on
arrival, regardless of how well the economy is doing.

------
adrianmonk
I considered trying one of these but I realized I'm not going to get _all_ my
at-home meals (or any drinks, snacks, paper towels, etc.) from them. Which
means I'm still making a weekly trip to the grocery store. So where's the
convenience?

------
lostphilosopher
Blue Apron customer here, family of two, three meals a week for the past two
years.

I like BA a lot, but I don't see anything about BA that is unique to them.
There's probably 5 other options in my area. I stick with BA largely due to
momentum.

For those curious:

Pros:

\- No food waste. Grocery shopping inevitably resulted in large amounts of
food getting tossed due to expiration (or even space concerns).

\- "Forced" variety. I have had a _ton_ of meals and ingredients I would have
never gotten if I wasn't doing BA. Things I've never heard of and wouldn't
know to ask for. Now that I know of them, I bring them into some of my non-BA
cooking too. Part of this is just just breaking habits. Before BA there were
about 10 meals I was making a lot - I liked them I know how, etc., this meant
I was only eating the ingredients in these meals which was probably not
"complete nutrition."

\- Learning a few "tricks." While the actual BA meals are cook by numbers, the
specific steps often contain general purpose info. Random example: Before BA I
never cooked with garlic, just never thought of it, but most BA meals use it.
Now I use more garlic when I cook non-BA meals.

\- Portion control. If I cook from a supermarket (and buy in super market
portions) I inevitably make more than a meal, and inevitably _eat_ more than a
meal. BA means I make and eat the suggested amount.

\- No grocery shopping. I'm not a big fan of shopping and my wife hates
grocery shopping, not having to do it is a plus.

\- Less eating out. BA isn't cheap, but it's cheaper than most restaurants I'd
go to. Having already paid for BA meals encourages eating them at home.

\- Fast. The food isn't easier to prepare and certainly doesn't cook faster,
but having exactly the right ingredients all together means I don't have to
spend time assembling (or googling alternatives when I realize I forgot
something).

\- Fun. I look cooking, and I like BA cooking. Probably not for everyone, but
there you have it.

Cons:

\- Not cheap.

\- Bummer when you don't like the meal. (Rare, but it happens.) Worse when you
_know you're not going to like it_ but it was you're only option. Example: The
texture of kale bugs me and sometimes you can't get a meal without it.

\- Doesn't scale for guests.

Note: I don't buy the argument that BA packaging is bad. It's almost all
recyclable. But I live in an area that makes recycling pretty easy so that
might not be generalizable.

~~~
Obi_Juan_Kenobi
> I don't buy the argument that BA packaging is bad. It's almost all
> recyclable.

Reduce, reuse, recycle. In that order.

People vastly overstate the value of recycling, especially for glass and
plastic. Steel and aluminum are about all that's 'good' to recycle.

For plastic and glass, it's only marginally less bad than going to a landfill.
The cost to collect, sort, melt, and produce an inferior product is just too
much.

~~~
Karunamon
Food waste has to be factored in. I can't help but wonder what the math for
net energy consumption breaks down as when you're forced to buy x+y quantity
of food when you only want or need x, vs packing material.

------
rcdmd
APRN's Q3 filings are ominous-- although margins are decent at 33%, they've
never been profitable and their customer base decreased 25% Sept. 2017 to
Sept. 2018.

------
magoon
Loved it but quality problems continued to rise. Quality consistency is core
to customer retention.

------
gammateam
Just reverse split: less shares, same market cap = higher price. wow no more
penny stock status

~~~
wgerard
Investors aren't stupid and realize a company doing a reverse split just to
maintain the minimum share price is doomed.

See also: $HMNY.

~~~
gammateam
then thats what the article should be about, not an arbitrary share price
metric

~~~
simias
It's a symbolic milestone, that's it. If a company's stock keeps plunging
eventually you have to decide that it's time to talk about it, having it cross
the $1 threshold seems like a decent time.

It gives an excuse to make an article and recap the events that lead to this
situation. As someone who didn't follow this story closely it's useful to have
this bit of context.

~~~
wgerard
> It's a symbolic milestone

It's actually not symbolic at all, it's a very real (negative) milestone that
has ramifications for the company.

------
joshstrange
Blue Apron, Hello Fresh, Plated, and all the other food prep deliver services
are a hack. A disgusting, wasteful hack.

Calling someone using Blue Apron a cook is like calling someone doing a "paint
by numbers" a painter. I'm not trying to be a cooking snob but I get really
sick of people praising BA/Plated/etc as some amazing concept or a huge time
saver. It's neither, it's for people who want food delivery (as in UberEats,
Grubhub, etc) with extra steps.

~~~
freehunter
>Calling someone using Blue Apron a cook is like calling someone doing a
"paint by numbers" a painter

>I'm not trying to be a cooking snob

Yes, yes you are trying to be a cooking snob. If you had said "someone who
uses Blue Apron is not a chef" you'd have a point, but then again no one ever
said that. Someone who cooks is a cook. Someone who paints is a painter. There
is a big difference between cook vs chef and painter vs artist.

Blue Apron is not McDonalds, they don't make your food for you. They give you
a recipe and the raw ingredients, same as finding a recipe online and buying
the raw ingredients from the store. And then you cook it. As any normal cook
would do.

