INSUBCONTINENT EXCLUSIVE:
Back in 2017, a formerly hot, formerly profitable company called Blue Apron went public
Today as the global stock market continues to fall, shares in the former venture darling are soaring, up more than 140% in midday
trading.
Before its IPO, the company had to reduce its price range from $15 to $17 per share to $10 to $11 per share
That pricing change limited the company worth, and reduced the capital it raised in its debut
The meal kit delivery company finally priced at $10 per share
It opened up a hair, but closed the day a mere penny above its IPO price.
Then things got worse
In fact, Blue Apron share price decline got so bad that in mid-2019 Blue Apron had to execute a 1-for-15 reverse split
In most stock splits, a company share price gets too high for comfort
So, the firm decides to give its investors the same value of the company, but in new, smaller chunks
So a concern trading for $1,000 per share that wanted to split would normally give, say, its investors 10 new shares worth $100 apiece in
exchange for their single $1,000 share.
As Uber and Lyft continue to melt, the 2019 unicorn class loses its shine
A reverse split is the
You get fewershares at a higher per-share value
It what you do if you need to avoid slipping under $1 per share, or other, similar fates.
Time passed, and everyone forgot about Blue Apron
in the same manner as they did Grubhub, companies that came, made an impact, went public and then slowly dissolved.
The latest
Until now
Suddenly Blue Apron is the hottest stock in the world, skyrocketing as other companies shed value
Today in regular trading, American indices fell so far that they triggered protective circuit breakers
At the same time, Blue Apron was doing this (via Google Finance):
Bear in mind that we are looking at the companyafter its reverse split
So, no, the company is not worth 60% more than its IPO price of $10 per share
Indeed, Blue Apron is worth just $211 million today including its day gains, according to Google Finance.
Blue Apron was worth about $1.9
billion when it went public, for reference.
Anyway, why is the company skyrocketing? TechCrunch thinks it figured it out
Walk with us:
Everyone is looking for something to buy that will go up as everything else goes down
Blue Apron makes meal kits that folks
can make at home
Over the weekend, many United States cities began shutting down
That meant less dine-in service
So people are now,
putatively, cooking more
That means Blue Apron might benefit!
Enter a hilarious momentum trade in a low-cap stock
Kaboom goes its share
price
Don''t pop the champagne
Blue Apron is still worth about what it raised as a private company; its market cap is only about 40% of the money it raised while private
in addition to its IPO haul
This company is still priced like it on life support.
And that makes some sense
Here are some facts from its Q4 and full-year 2019 report:
1.62 million Q4 orders, down from both Q3 2019 (1.73 million) and Q4 2018 (2.42
million)
$94.3 million in Q4 revenue, down 33% compared to the year-ago period
A net loss of $21.9 million
Not great! Perhaps Blue Apron
will explode, beating guidance and earning its newly resurrected share price
But before you pile into the company, pause, and then probably don''t.
