People may be stuck at home and making more of their own dinners as a result. But that’s not helping meal kit company Blue Apron. Shares of Blue Apron (APRN) plunged nearly 20% in early trading Wednesday after the company reported a wider-than-expected loss for the first quarter and a sales decrease of 28% from the same period a year ago.
But Blue Apron’s stock is still up 45% in 2020. So this could be a classic case of investors selling the news. Traders have bet that Blue Apron would benefit from the Covid-19 outbreak, which has shuttered many restaurants. To that end, the company is still optimistic about the rest of 2020.
Since late March, we have seen increased demand from existing, returning and new customers in response to the COVID-19 pandemic, and we are proud of our team’s quick actions taken across the business to address this increased demand,” said Blue Apron CEO Linda Findley Kozlowski in a press release.
The company added that it’s adding workers at fulfillment centers to meet the expected uptick in sales. But Blue Apron also noted that “the duration and extent of this demand increase is unknown.”
The meal kit industry is highly competitive. Blue Apron has to contend with HelloFresh and Sun Basket as well as two companies backed my grocery giants — Albertsons-owned Plated and Kroger’s (KR) Home Chef.
And in perhaps another worrisome sign, Blue Apron disclosed in a separate press release Wednesday that it was filing to raise $75 million from the sale of stock or bonds — a move that could dilute the value of existing shareholders.