NEW YORK - The worst big IPO of 2017 is looking to appeal to investors with some 2019 flavoring. Blue Apron’s shares surged over 50% on Tuesday after it agreed to put Beyond Meat’s plant-based burgers on its meal-kit menus. Other companies have juiced their stock with cannabis or crypto ventures, but the effect almost always fades. This one promises a similarly disappointing aftertaste.
Borrowing from the zeitgeist can work for a time. Long Island Iced Tea was a tiny beverage maker when it changed its name to Long Blockchain in 2017, causing its shares to more than triple overnight. But digital ledger technology doesn’t shift more drinks, and the company is once again a penny stock with sliding sales. Similarly, Eastman Kodak has lost all the bump it got from announcing a planned crypto coin in January 2018, while wine and beer maker Constellation Brands is worth less today than when it took a $4 billion stake in Canadian cannabis producer Canopy Growth.
Blue Apron’s tie-up with Beyond Meat, which listed in New York two month ago and is now worth $10 billion, at least makes sense. It delivers easy-to-prepare meal kits for consumers to cook at home. Adding plant-based meat alternatives, which have attracted plenty of consumer buzz, makes culinary and financial sense.
The trouble is, it doesn’t change the weak fundamentals of Blue Apron’s business. There are dozens of competitors and no barriers to entry, which is why the company’s value has fallen nearly 95% since its IPO. Beyond Meat has performed far better, but it too is an unproven business that is already attracting fierce competition. Fancy vegan burgers may not live up to the stock-market hype; the idea they can save Blue Apron is even more far fetched.
- Blue Apron on July 16 said it would begin offering plant-based burgers from Beyond Meat in some of its meal kits beginning in August.
(Editing by John Foley and Amanda Gomez)
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