Blue Apron shares drop after Amazon files for meal-kit trademark

Tammy Harvey
July 18, 2017

Blue Apron already faces competition from similar startups as well as grocery delivery services now offered by Amazon's Prime service and Whole Foods' partnership with Instacart Inc.

Salzberg, 33, co-founded Blue Apron five years ago.

Now, Amazon is causing some serious indigestion for Blue Apron, which was already grappling with fears of competition in the burgeoning business of shipping boxes of fresh, premeasured ingredients with recipes.

Amazon didn't immediately respond to a request for comment. That left some thinking it could be a good partner for Whole Foods Markets - until Amazon moved, two weeks after Blue Apron filed its prospectus, to buy the retail chain, limiting Blue Apron's options.

Amazon, via its Amazon Technologies unit, filed a trademark application for prepared food kits on July 6, according to a listing from legal information site Justia. Over the years, it has launched services like AmazonFresh and Pantry. The stock fell as low as $6.51, Blue Apron's worst performance since it made its debut June 29.

Blue Apron stock has been consistently threatened by Amazon since its IPO last month because of Amazon's acquisition of Whole Foods (WFM - Free Report). Blue Apron said it had more than 1 million customers at the end of March. Shares closed Friday at $7.36, or 26.4% below the IPO price. It seems like the next logical step for Amazon's grocery ambitions, and this all points to the fact that Blue Apron doesn't own a competitive advantage in an industry with low barriers to entry - not something investors are looking for. If the company becomes strapped for cash, it may increase its borrowing capacity under a revolving credit facility or raise additional funds through equity or debt financing arrangements, the filing said.

Since its initial public offering, though, shares of Blue Apron have tumbled. It lost another 10 percent in trading Monday after Amazon's trademark application was announced.

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