Blue Apron shareholder Ahmed Chaudhry has filed a complaint against the meal-delivery company for “misleading” and “untrue statements” in its filing with the Securities and Exchange Commission leading up to its public offering. The suit also takes aim at the underwriters of Blue Apron’s IPO (Goldman Sachs, Morgan Stanley, Citigroup Global, and Barclays Capital) and is filed on behalf of all purchasers of Class A common stock.
The lawsuit alleges that Blue Apron failed to disclose the following issues before its IPO:
- the Company was experiencing delays at its new factory in Linden, New Jersey, which would force the Company to delay new product roll-outs;
- the Company had already decided to reduce advertising expenditures in the second quarter of 2017, which would depress sales in future quarters;
- the Company was aware of Amazon’s efforts to enter the meal-delivery business and that Amazon was looking to acquire assets to help it in this regard; and
- the Company was experiencing issues delivering meals to customers on time and with of the all ingredients, which was hurting customer retention rates.
Blue Apron has had its fair share of trouble lately. Since debuting in June at $10 a share, its stock price has fallen by nearly half. Over the summer, Amazon announced its acquisition of Whole Foods Market and began expanding its meal-kit offerings. Meanwhile, Blue Apron acknowledged setbacks with its new fulfillment center in Linden, New Jersey, during its first earnings call.
Even before it went public, the company had issues. Its marketing spend, for example, was impossibly high: $94 per customer. Its path to profitability looked so harried, based on its prospectus, that it caused me to ponder whether the company would even exist in five years.