The Only Way to Make Money Off Blue Apron

Shah Gilani

Blue Apron Holdings Inc.'s (NYSE: APRN) days, despite first debuting on the NYSE as recently as June 28, may be numbered.

Amid rumors of the company having to go public to raise desperately needed cash, it made its debut exactly when tech stocks were tumbling. As if that wasn't hard enough, its debut also collided with the announcement that Amazon.com Inc. (Nasdaq: AMZN) was buying Whole Foods, knocking the company's pre-IPO valuation down from $3.2 billion to $1.9 billion.

Since the stock began trading in the open market, it's down a whopping 36%.

A big chunk of that loss came this week, some might say out of left field.

Left field is, of course, where Amazon lurks before pouncing onto center stage and upending whatever game everyone's playing. The business that Blue Apron thought it controlled got punched in the gut by what Amazon just did.

Here's what it means for Blue Apron, and how to profit from their almost inevitable end...

Why the Service Left a Bad Taste in My Mouth

I admit I tried Blue Apron - not the stock mind you, I wouldn't touch that with a 10-foot pool. I tried the meal delivery service.

It wasn't my idea. A couple who I'm good friends with were telling me they liked following Blue Apron's recipes and cooking together. They (and their two children) thought the dishes were delicious, so they "gifted" me a box of three meals.

Blue Apron encourages subscribers to gift a box of meals to friends and even strangers. The idea makes sense: you get a box of three different meals complete with every ingredient you'll need, individually wrapped, with recipes for three meals - in my case, for two people - packed in ice and delivered to your front door.

I opened the box I got about a week later, admired how everything was packed (except for the waste factor), followed the mostly easy recipes and mostly enjoyed the meals.

What happened next was interesting.

Without intentionally signing up for the service, a week later I started getting once-a-week deliveries of Blue Apron boxes. The billing magically showed up on my American Express.

At less than $10 per meal per person, I went with it to see what else they would send me.

The bottom line is this... I'm a decent chef and I like to cook. I found the Blue Apron recipes fairly easy, but the time to make most of the dishes took longer than I would have preferred.

While I could get over that if the meals were interesting and exotic enough, which I will happily say that some were, the fact is many of them ended up being disappointing in the taste department.

And being single, always cooking for two when it was often just me resulted in leftovers, or (who would have guessed) eating more than I should have. Maybe that explains that extra 10 pounds I'm carrying around.

After two months, or about eight deliveries, I cancelled the service. Except I never got confirmation that my cancellation notice was received, and boxes kept coming.

Last week, again, I followed the instructions to cancel the subscription, adding a curt note in the email. Hopefully, this time it sticks.

They won't get paid because I've already notified American Express, who are amazing at taking care of issues like this. So Blue Apron, which is losing money, will be wasting more of their money if they keep sending me gifts.

What's telling in my little story is that cancelling Blue Apron subscriptions is almost epidemic.

In Wednesday's article, I listed some frightening retention rates for meal-kit deliveries and said that should be a huge concern for Blue Apron and its shareholders.

But what's a much bigger concern for Blue Apron is what Amazon put out this past weekend.

How to Profit from APRN

Shah Gilani

About the Author

Browse Shah's articles | View Shah's research services

Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.

The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.

Shah founded a second hedge fund in 1999, which he ran until 2003.

Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.

Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.

Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.

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