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The title of Blue Apron has lost 93% of its value since its IPO two years ago. On Monday, the management essentially broke the emergency glass.
The Manhattan-based foodservice company has announced that it would proceed with an inverted division of its stock ranging from 1 in 5 to 1 for 15, thereby reducing the number of shares, so that each will be worth more. only a few nickels and dimes. .
Blue Apron should aim high, as at the time of writing this article, its stock traded at 68 cents per share. This number must be at least $ 1 to continue to be listed on the New York Stock Exchange.
"The main objective of the proposed equity division is to increase the market price," said Blue Apron in a frank statement.
A reverse division does not affect the market value of a company; Think of it as a pie cut in fewer slices. These splits are undertaken when other management's ideas to raise the stock price have not worked, which is why a study conducted in 2008 on more than 1,600 reverse splits over a period of one year. 40 years has shown that the companies that did them have underperformed by 50% their peers.
Citigroup made a 1 in 10 split in 2011 as its shares traded at an embarrassing $ 4 per share price. The American International Group split 1 in 20 during the dark days of 2009. Alternative fund company Och-Ziff Capital Management reversed its shares earlier this year.
Blue Apron had a market value of nearly $ 2 billion when it was floated at $ 10 per share in June 2017. The price dropped as investors worried about the price. that customers did not stay long with the company. Blue Apron remains unprofitable.
Last month, the company said it had reached an "important milestone in terms of profitability" by reporting a jump in adjusted EBITDA, defined as earnings before certain compensation costs and other items. But obviously, not enough people have swallowed this explanation.
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