Doing a reverse split just to meet the share price requirements is generally viewed as a sign the company is spiraling out of control (i.e. investors will continue selling to cut their losses).
I don't have the numbers offhand, but I would wager a large sum that companies in trouble doing reverse splits just to meet listing requirements almost always continue tumbling downwards. For a recent example, see Helios and Matheson (MoviePass).
Companies that have successfully navigated reverse splits while publicly-listed (it's very common with pre-IPO companies for sure) are generally much larger and more well-known than Blue Apron (e.g. AIG), or in inherently risky businesses (e.g. Biotech companies).
Perhaps not spiraling but yes it isn't exactly a healthy sign either. It happened a lot during the dot com fallout :-) and even Sun did a reverse split 3:1 on its way out of existence. Literally though it is 'price neutral' and serves to meet investor needs (like to stay listed on an exchange) just as 'forward splits' are done, in part, to enable institutional investors to own fractions that are compatible with their portfolio goals.
> even Sun did a reverse split 3:1 on its way out of existence
"on its way out of existence" being the operative phrase there :).
Either way, Sun had been a public company for 20 years at that point - Blue Apron's been one for a year. Far more reason to believe that Sun could turn it around (and AIG and similar companies), which is why it works for them and not for Blue Apron.
> I don't have the numbers offhand, but I would wager a large sum that companies in trouble doing reverse splits just to meet listing requirements almost always continue tumbling downwards.
If you believe markets are even slightly efficient, you'd lose this wager. Companies announce reverse splits before they happen. Therefore, any predictable price depression will be priced in before the split.
Put another way, your hypothesis is simple and easily testable. Because it's so simple, even if it held true at some point in the past, it would no longer be true because a hedge fund or counter party would have done the work to price it in pre-split.
I don't have the numbers offhand, but I would wager a large sum that companies in trouble doing reverse splits just to meet listing requirements almost always continue tumbling downwards. For a recent example, see Helios and Matheson (MoviePass).
Companies that have successfully navigated reverse splits while publicly-listed (it's very common with pre-IPO companies for sure) are generally much larger and more well-known than Blue Apron (e.g. AIG), or in inherently risky businesses (e.g. Biotech companies).