Blue Apron Shares Tank On Reports Of Job Reductions

Blue Apron (APRN) could have a smaller workforce soon, news that comes barely five weeks after its underwhelming IPO.

The meal-kit delivery system is eliminating 1,270 jobs from a Jersey City, N.J., facility it is closing in October, according to a public notice this week required of employers by federal law when they are planning large scale layoffs. (Blue Apron, which went public in June, had 5,202 employees as of March 31, according to its initial public offering prospectus. The fast-growing company 1,051 employees only two and a half years ago.)

But it is consolidating its New Jersey operations at a new 495,000-square-foot fulfillment center in Linden, some 15 miles away from Jersey City and Blue Apron says it has given all that staff the option of going to work at that facility. A spokeswoman said some 800 of the affected employees have opted to make the move to Linden, while the rest have yet to tell Blue Apron their decision. Still that means that the number of jobs eliminated at the unprofitable company could be significant though not as high as some initial news reports suggested.

Still, the news rattled investors, coming just days after Blue Apron announced the exit of operations chief and co-founder Matt Wadiak as part of a post IPO-shakeup.

Blue Apron shares were down 5.6% to $5.87 on Friday in afternoon trading. That’s a far cry weeks from the $10 level of Blue Apron’s IPO only five weeks ago, already a let down from very high expectations: the IPO was one of most anticipated 2017, and at one point the company was expected to hit a $3 billion market capitalization upon going public. At $5.87, its market cap is $1.12 billion.

The company was founded in 2012 as a way to deliver meals to homes in a direct-to-consumer model that goes around grocery stores and restaurants. By the end of March, Blue Apron had delivered 159 million meals across the U.S., representing about 25 million paid orders. And revenue growth has been torrid: jumping to $795.4 million last year from $77.8 million in 2014, though the company has clocked in losses. Blue Apron—which ships meals that cost $9.99 per person for a two-person household—had 1.04 million customers as of the end of the March quarter,

Concerns about what’s (AMZN)pending $13.7 billion deal to buy grocer Whole Foods Market (WFM) could do to the meal-kit industry have dragged down Blue Apron shares.

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