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Stephen Gandel is a Bloomberg Gadfly columnist covering equity markets. He was previously a deputy digital editor for Fortune and an economics blogger at Time. He has also covered finance and the housing market.

(Updated )

Blue Apron is either a tech company re-engineering the global food supply chain or a grocery store that delivers. Which one investors choose will have a big impact on where the beleaguered shares of the meal-kit maker are headed next.

On Monday, nearly a dozen investment banks picked up coverage of Blue Apron, which went public in late June. The stock hasn't done well, dropping to a low of $6.36 last week from its $10 IPO price. But most of the analysts think the shares will do better from here, and shares of the company rose more than 14 percent on Monday.

Checkout Line
Investors exiting shares of Blue Apron since its IPO has caused its stock to drop
Source: Bloomberg

One of the more positive predictions came from Goldman Sachs Group Inc., which co-led the IPO. Analyst Heath Terry says Blue Apron's stock will rise nearly 70 percent in the next 12 months to $11. He also expects that the company will start to make a profit, excluding interest, taxes and depreciation costs, as soon as 2020. It's expected to lose as much as $115 million this year on that measure.

Positive Thinking
Of the 11 Wall Street banks that picked up coverage of Blue Apron's shares on Monday, seven predicted the shares would outperform the market over the next year
Source: Bloomberg

Blue Apron has tried to pitch itself as disrupter, employing engineers, crop specialists and its own better-mousetrap offering as a means to make the food business not only less wasteful but more profitable. That hasn't been the case, but Goldman seems to think it will. Consider inventory. Goldman says that by 2018, Blue Apron's inventory will equal 15 percent of quarterly sales. That would be a big savings. Blue Apron's inventory is food, and waste is a huge cost. But 15 percent would not only be much lower than Blue Apron's current 20 percent inventory levels, it would also be significantly better than nearly everyone else in its industry. Kroger's inventory equals 24 percent of its quarterly sales.

Goldman's prediction for overall food costs for Blue Apron, too, fall to 62 percent by 2019. Kroger Co. and Whole Foods Market Inc. are 78 percent and 66 percent, respectively. Figure in the higher food costs, and profits for Blue Apron will take much longer than 2020.

But it's not just the profit estimate that is a problem with the ripening outlook for the company's shares. Goldman says Blue Apron should trade at a multiple of 1.5 times its estimated 2018 sales, similar to its peers. But who are its peers? Goldman says that group includes, among others, Amazon, Etsy, and Netflix. Based on that group, Blue Apron's stock price can easily rise to $11. Netflix, after all, trades at more than 7 times sales.

Kroger, on the other hand, trades at 0.2 times sales. Whole Foods was just bought by Amazon for 0.8 times sales. Assume those are Blue Apron's peers, and the stock should be worth more like $4. Blue Apron, like many start-ups, have Wall Street analysts convinced it's an innovator. Not every tech unicorn will be. If Blue Apron is just a grocery delivery service with a spiffy website, its shares could soon be worth a lot less.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Stephen Gandel in New York at sgandel2@bloomberg.net

To contact the editor responsible for this story:
Daniel Niemi at dniemi1@bloomberg.net