In the public sphere, the New York-based meal kit delivery service's IPO comes at an unsettling time as the markets begin to digest Amazon Inc.'s (AMZN) industry-transforming $13.4 billion acquisition of Whole Foods Market Inc. Instead of pricing its 30 million shares between $15 and $17, the company now is targeting a range of $10 to $11, according to paperwork filed with the Securities and Exchange Commission. That gives Blue Apron a market value of nearly $1.9 billion.
Following Amazon's landmark purchase of Whole Foods last week, Blue Apron announced a surprisingly optimistic IPO price.
"Already, it is a competitive business".
IPO Boutique said its sources had indicated that the roadshow designed to promote the offering to institutional investors "has continued to be challenging for management as they attempt to diffuse the highly likely fact that extensive losses in the future could and likely will create problems". While revenues have grown sharply over the past few years, Blue Apron continues to lose money as it invests heavily in marketing and building out its network of suppliers. Previous year the company lost $54.9 million and the number was $47 million for 2015.
So, if smaller players in the food delivery space (like Sun Basket, Green Chef, and Home Chef) were hoping this offering would pave the way for their own success, looks like they're shiitake out of luck. "The market is asking for a discount for those uncertainties". All three have struggled to turn profits and produce the kind of breakneck growth Wall Street has been trained to expect from tech success stories like Facebook and Google. It is expected to price during the week of June 26, 2017. Both companies face concerns about competition and have struggled to justify their lofty private valuations to public investors. The do-it-yourself meal-kit delivery service is going public tomorrow. Chef's Plate, a startup based in Canada, is planning an IPO in the next year or two.
Blue Apron's troubles highlight a bigger issue with Amazon: that it stands capable of erasing billions of dollars of market value with even the simplest corporate action. "That's bad news for everybody", he says.