U.S. Markets closed

Why Blue Apron Holdings Inc. Stock Was Sliding Today

Jeremy Bowman, The Motley Fool

What happened

Shares of Blue Apron Holdings Inc. (NYSE: APRN) were trading lower today, apparently on a report from Bloomberg that the company was using gestation crates for its pigs, a practice deemed cruel by animal welfare activists. As of 3:11 p.m. EDT, the stock was down 6.4%.

A collection of ingredients in a Blue Apron meal kit

Image source: Blue Apron.

So what

The Bloomberg report actually came out Friday, when Blue Apron stock fell 4%, and shares continued to decline today as the news site found that the meal-kit service and Tyson Foods (NYSE: TSN) Open Prairie Natural Pork have sold pork from pigs that were housed in gestation crates -- cages so small that pregnant sows can't turn around.

Blue Apron pledged in June to stop using gestation crates by the end of 2019, saying that all of its pork will be Certified Humane or certified as Global Animal Partnership Step 1.

Now what

Normally, such news might not affect a stock, but Blue Apron is already struggling, and its brand image is based in part on being a humane and conscious seller of natural foods. For instance, Blue Apron says its suppliers never use subtherapeutic doses of antibiotics on animals, and it has positioned itself as a healthier alternative to standard supermarket fare.

Given the challenges the company has already faced and the intensifying competition in the meal-kit space, news that the company was not meeting the standards some of its customers may have expected can only damage the brand, costing it sales. While this news isn't likely to have a significant effect on Blue Apron's results, it's unwelcome at a time when the company is trying to restore investor faith. Shares approached an all-time low on the news.

Editor's note: This article has been corrected to reflect that Blue Apron's pledge to stop using gestation crates was made prior to the Bloomberg report and not in response to it.

More From The Motley Fool

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.