Blue Apron Hit with Multiple Shareholder Lawsuits

Blue Apron Hit with Multiple Shareholder Lawsuits

Blue Apron Hit with Multiple Shareholder Lawsuits

The cooking kit company has seen its share price nearly cut in half since its late June IPO and now it could be in legal trouble, too.

Various law firms are coming after the company with proposed class-action lawsuits, alleging that Blue Apron failed to adequately disclose material information. According to sources close to the company, some of these lawsuits are still seeking plaintiffs.

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.

Apart from the outlined issues above that have put pressure on Blue Apron’s stock, IPO investors were at least made aware of this particular concern ahead of time. After closing on its first day of trading at $10 a share, Blue Apron has steadily declined, closing at $5.24 a share on Monday, or 48 percent below its offering price.

It is not uncommon for struggling companies to face shareholder lawsuits. This issue is known as stock-drop challenges.

“As soon as the stock goes down like that, the lawyers come out,” said Kathleen Smith, a principal at Renaissance Capital who manages IPO ETFs.

Smith says that these lawsuits usually get settled. Among the reasons: to win, a plaintiff’s lawyers must prove that the company made false statements, and that those false statements were material and that the plaintiff relied on them, which isn’t easy to do. With Blue Apron already undergoing so many challenges, settling looks like the only probable cause of action. The company would want to shut this issue down as soon as possible to avoid any damage to the company’s image.

Megha Shah
Megha Shah
A dreamer, traveler, aspiring entrepreneur and a bookworm beyond repair, Megha Shah is extremely fond of writing and has been doing so since she was a child. Apart from being a part-time writer, Megha is currently in college, pursuing B. Com. (Hons). Megha is an ardent follower of ‘Hardship, Hustle and Heart’ and firmly believes in the power of hard work and destiny!

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