APRN - Blue Apron stock sinks 22% premarket on big revenue miss going concern risks

Blue Apron ( NYSE: APRN ) stock sank 22% premarket on Monday after the firm guided Q3 revenue well below Street estimates and flagged going concern risks.

APRN expects Q3 net revenue to be $109M-$112M, ~$16M-$19M below its expectation, primarily due to a shift in the timing of an anticipated bulk sale of ~$15M to an enterprise customer. Consensus estimate is $129.60M.

The bulk sale was expected in Q3 similar to the $10M bulk sale to the same customer in June, which was funded in connection with a directed donation from an affiliate of Joseph Sanberg, APRN's largest shareholder.

APRN said its ability to meet 2022 revenue growth target depends on additional bulk sales to the enterprise customer totaling ~$30M in Q4, which includes the previously anticipated bulk sales in Q3.

APRN also announced a $15M at-the-market offering for its class A stock. Net proceeds will be used for working capital and other general corporate purposes.

As of Sept. 29, APRN had ~$32.1M in cash and cash equivalents.

APRN in Apr. inked an RJB private placement purchase deal with RJB, an affiliate of Sanberg, for the issue and sale of 3.3M class A shares for $40M.

APRN in May entered into a gift card sponsorship deal with a separate affiliate of Sanberg, under which the affiliate agreed to pay the firm $20M net sponsorship fee to fund distribution of gift cards.

If APRN receives the remaining $69.4M under the above deals and is able to achieve anticipated savings through cost cuts, it believes net proceeds from the offering, along with existing cash, will be sufficient to meet anticipated cash needs for the next 12 months.

If APRN does not receive $69.4M it is owed, it expects net proceeds from the offering and existing cash will be sufficient to meet anticipated cash needs till some time in Q1 2023.

If APRN does not secure additional equity or debt financing, and assuming it receives all proceeds from the offering but not the $69.4M it is owed, it will not be able to satisfy the minimum liquidity covenant under a note purchase and guarantee agreement for its secured indebtedness.

If APRN is unable to renegotiate the terms of the above deal, it will be unable to meet current obligations and continue to operate as a going concern.

APRN's total outstanding debt, net of unamortized debt issuance costs, was $27.4M as of Sept. 30.

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