Shares of Blue Apron Holdings Inc. (NYSE: APRN) were falling for the second session in a row today as the meal-kit service continued to react to news that rival Chef'd was going out of business.
After falling 8.5% on Friday, Blue Apron stock was down as much as 9.3% today, but gained most of it back and was trading down 2.4% at noon.
Image source: Blue Apron.
Blue Apron stock has been sliding for the last week after investors first seemed to fear the impact of Amazon's Prime Day now that Whole Foods Market was included. Later in the week, the stock tumbled again on news that Chef'd was suspending its business.
The national meal-kit provider had taken funding from both venture capital and big food companies like Campbell Soup. Chef'd never gained significant market share and its sales growth recently turned negative, spelling doom for a company that was once valued at $160 million.
The market seems to be interpreting Chef'd's dissolution as a warning for the broader meal-kit industry, especially for companies like Blue Apron that are still operating independently.
Many of Blue Apron's peers have already teamed up with a larger supermarket chain. Albertson's acquired Plated last year, and Kroger recently bought Home Chef. Blue Apron has partnered with Costco in a pilot program to sell its kits in Costco stores, sparking rumors of a potential acquisition, but that seems unlikely at this point. While Blue Apron is much larger than Chef'd ever was, it still isn't profitable, and it's unclear if it ever will be. Though its demise doesn't appear to be imminent, a strategic partnership or acquisition may be the company's best exit strategy in a competitive industry with bad economics.
We'll learn more when the company reports second-quarter earnings, which is expected Aug. 2.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jeremy Bowman owns shares of Kroger. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Costco Wholesale. The Motley Fool has a disclosure policy.