APRN Stock Alert: What to Know About Blue Apron Layoffs
Struggling since long before the pandemic, Blue Apron (NYSE:APRN) announced a headcount reduction today. According to a press release, the move is part of an initiative to drive the company toward profitability. While APRN stock popped higher on the announcement, the swing up lacks conviction against a decisively negative long-term trajectory. Further, it’s not the first time high-profile Blue Apron layoffs have occurred.
According to a corporate statement, Blue Apron identified multiple initiatives to reduce expenses. This framework includes “a plan for meaningful reduction in marketing, consulting and labor spend in 2023.” Therefore, to “better align internal resources with strategic priorities,” the company decided to cut approximately 10% of its total corporate workforce. Blue Apron elaborates in the release:
“As a result of these actions, the company expects to incur approximately $1.2 million in employee-related expenses, primarily consisting of severance payments, substantially all of which will result in cash expenditures. The company expects to recognize such expenses in the fourth quarter of 2022.”
APRN stock is up by about 3% as of this writing. Nevertheless, shares remain down roughly 25% just in the last five trading days. This implies that the Blue Apron layoffs may represent only a bandage to severe fundamental vulnerabilities.
Not the First Time Blue Apron Layoffs Shook the Business
Although a pioneer in the meal-kit delivery industry, APRN stock has been an inauspicious investment from the start. In June 2017, the company launched its initial public offering (IPO). By October 2017, Blue Apron layoffs hit the news cycle, with management cutting 6% of its workforce at the time.
A little over a year later, Blue Apron layoffs generated business headlines again. Around mid-November 2018, CNN reported another 4% workforce reduction. During this announcement, management stated that the pink slips would cost “about $1.6 million in severance charges” but also save $16 million in personnel expenses the following year.
Describing the November cuts, CNN bluntly stated that “Blue Apron needs every dollar in savings that it can get.” In particular, the outlet cited concerns about rising competition.
A Bleak Future for APRN Stock
Prior to the latest round of Blue Apron layoffs, Grand View Research noted that the global meal-kit delivery service market reached a valuation of $15.2 billion in 2021. Experts project that by 2030, the sector’s revenue will hit $64.3 billion. While intriguing, this forecast may be of little value to APRN stock.
For one thing, shares remain on life support. On a year-to-date (YTD) basis, APRN stock has hemorrhaged more than 88% of market value. Further, since its first public close, the stock has unfathomably lost more than 99%. It’s now a literal penny stock, trading hands for around 79 cents. A de-listing from the New York Stock Exchange seems almost inevitable given APRN’s flirtations with danger in the past.
On top of all of this, meal kits unfavorably rank among the top segments of the trade-down chain. Should consumer sentiment worsen, consumers can simply cancel discretionary expenses. Even the sharpest of Blue Apron layoffs might not be able to move this needle for the better.
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On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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