Lost in the sauce
Blue Apron gets stirred up
Good morning, culinary connoisseurs. This is your Stock Market Rundown for October 6th, 2023. Thanks for taking a seat at my table today. Let’s bite in:
TODAY’S TOP STORY: RECIPE FOR FAILURE 🥣
Another day, another direct-to-consumer fad blowing up: Blue Apron was just acquired for $100 million. That’s down 95% from its peak valuation of nearly $2 billion at its IPO in 2017.
Remember subscription meal kits? A bunch of limp vegetables in a cardboard box, which you were instructed to assemble and sautee yourself? Talk about a zero interest rate phenomenon.
Blue Apron, to its credit, was an industry pioneer when it was founded in 2012. Management spent big to acquire customers: you might have seen their “$50 off” coupons stuffed in your mailbox—right beside competing coupons from HelloFresh, Plated, and Sunbasket.
That’s the problem: there are zero barriers to entry in this business. Anybody with a pile of cardboard boxes, a warehouse to pack them in, and access to a grocery store can do it. Today, there are over 150 meal kit companies. That’s more Maple & Ginger Glazed Salmon with Watercress than anybody needs in their life.
And that’s probably why—despite partnerships with Costco and Walmart—Blue Apron struggled to turn a profit, and has now been swallowed up for chump change.
Meal kit companies got a boost in the pandemic, as stuck-at-home families craved the novelty of Orange & Parsnip Salad and Thai Shrimp Soup. But when life went back to normal, everybody suddenly remembered you can get your vegetables much cheaper strolling the grocery store aisles. Watercress, anyone?
SO WHAT ELSE IS GOING ON?
CarMax, the nation’s largest used-car retailer, reported worse-than-expected quarterly results. Low consumer confidence and tighter lending standards have buyers trading down from their Dodge Charger fantasies to a more realistic Kia.
Still rocking your cargo shorts and tank tops even though it’s October? You’re not alone: unseasonably warm weather is denting retailers’ bottom lines. With patios still hopping, consumers aren’t even thinking about picking up this season’s Canada Goose parkas.
Look out below: JP Morgan head honcho Jamie DImon says he’s urging clients to gird their loins for rates going higher, causing more stress in financial markets.
Saudi Arabia has made billions in windfall profits thanks to the OPEC cartel’s production cuts driving up global energy commodity prices. Convenient for the Saudis—they can use the cash to pay Cristiano Ronaldo’s $200 million soccer contract.
Uber just announced a partnership that lets taxi fleets piggyback on the app. Cab drivers get rides; Uber gets a cut of the fees. You get to inhale the dubious fragrance of the Christmas-tree-shaped air freshener hanging from the rearview mirror.
That’s a wrap on the week, my friends. Stock Market Rundown will be gone fishin’ this Monday for the Columbus Day holiday; let’s reconvene first thing Tuesday morning. Yours in capitalism, The Axe