Shares of Blue Apron plunged more than 15% on Monday after the meal kit company said it is waiting for a key investor to deliver $56.5 million in promised funding.
The struggling Big Apple company could not guarantee that the expected funding from founding investor Joseph Sandberg would come through and therefore withdrew its previous revenue guidance of 7% to 13% growth for 2022.
“The company expects that it will breach its minimum liquidity covenant as early as later this month,” Blue Apron said in a statement, if funding isn’t delivered in a “timely manner” and it “is unable to reduce a sufficient amount of costs, raise alternative funds or negotiate covenant relief from its lenders.”
The company said it is in discussions with its financial advisors and lenders to “stabilize its cash position.” It’s also looking for ways to reduce its costs, the company said in its third quarter financial results in which it reported that revenues were down 12% to $110 million from the previous year and flat from a year ago.
Blue Apron was among the pandemic darlings which experience soaring growth as consumers hunkered down at home, but it was never able to harness the demand and become consistently profitable, according to its financials.
The company has long dealt with cash crunch concerns. In May Sandberg, who runs RJB Partners, asked his Twitter followers whether he should take the company private. He had just led a $70.5 million stock capital and debt infusion in the company.
In a statement at the time he said, “I believe that their commitment to doing right by the planet and their customers through sustainable sourcing, packaging and a goal of net zero status is aligned with consumers and investors alike in driving a great business for the future. Linda [Findley, CEO] and the team at Blue Apron have my continued support as they execute on their strategy.”
Blue Apron’s shares have fallen to less than $2 per share and its market cap to $62 million, a far cry from its $1.9 billion value when it went public in 2017.