After all, Blue Apron is more than just a delivery service. The company gathers data to predict what its customers will want next, and its direct-to-consumer model lets it deliver highly perishable products fresh while giving customers deals and making more money.
Blue Apron's financials were also notably strong. The company doubled its year-over-year revenue from $340 in 2015 to $795 million in 2016, with revenue growth of 133 percent last year.
Its gross margin, or what Blue Apron makes after subtracting the cost of goods sold, also grew by the high double digits in 2015 and 2016. But in 2017, both revenue and gross margin growth slowed dramatically — gross margins actually declined in the first quarter to 31.2 percent.
"For ages, this company's fabulous margins were what made it stand out from traditional grocers, where the margins are razor-thin and continue to be pressured by ruinous competition every day. Yet now, Blue Apron's margins are getting worse, too, and we've got to wonder if they may have peaked last year," when they were 33 percent, Cramer said.
The main problem Blue Apron faces is a crowd of competing meal kit services including Plated, HelloFresh and Munchery, all of which threaten the newly public company's profits.
But they are not the only threat. As Blue Apron's business grows, the costs of marketing, products, technology, and other expenses grow with it.
That settled in when the company's earnings before interest, taxes, depreciation and amortization, or EBITDA, were lower in the first quarter of 2017 than the were in the last two full years combined.
"It's unsustainable," Cramer said. "As long as its costs keep rising faster than its sales, it's hard to see how Blue Apron can become profitable, but if they cut back on their spending? Jeez, then the competition might steamroll them."
The most profound steamroller yet could prove to be Amazon, which announced its $13.7 billion bid for high-end grocer Whole Foods less than two weeks before Blue Apron's IPO.
While the situation for Blue Apron seems grim, Cramer did not want to tie it too closely to the IPO market for tech companies, specifically. He did not see its problems as emblematic of struggles in tech, but rather, as a symptom of problems in the grocery space.
"Here's the bottom line: don't freak out about Blue Apron. This is a company that came public too late, too late to cash in on the period of insane growth," Cramer said. "It probably should've IPO'd a year ago if it wanted to get a better valuation. Could it be worth owning at some level? Look, I'm concerned about what Blue Apron's first quarter out of the gate as a public company might look like, so my advice to you here is to stay on the sidelines for now and be patient. Maybe they can get the problems under control and you can swoop in at a lower level. Maybe."
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