While the Amazon-Whole Foods deal was on nearly everyone’s mind, the Blue Apron IPO last week says more about the near future of the merge between the food industry and tech companies than anything else.
Even though the Blue Apron IPO falls short of the company’s own expectations and raises considerable concerns about the New York-based startup among investors, the results aren’t a complete surprise.
Blue Apron (APRN) went public having slashed its planned offer by $5 from the original $15-$17 of its original plan last Thursday. While it reached $11 by that same afternoon, it closed its first day at roughly the original price. By Friday, it closed the week at $9.34 and expects to continue its bid for founding through the market closely watched by experts and other food subscription companies alike.
The result of this IPO falls short also of the company’s expectations of raising 500 million by trading 30 million shares. Its debut last Thursday left Blue Apron with roughly 135 million for feeding its business.
“The stock price today, whether it’s up, down, left or right, is really just the beginning of this new chapter in our company’s life,” says CEO Matthew Salzberg, according to CNBC. What Salzberg is saying, perhaps, is that Blue Apron has more urgent tasks to tackle to improve its trading appeal.
For instance, the market value will benefit from an increase of average revenue per customer. Last quarter, the New York company reported a $236 revenue per customer, which falls in the low part of the chart for the last two years.
“The two factors affecting revenue per customer are average order value and orders per customer. Both declined year over year in the first quarter,” says Adam Levy of the stock and trading analysis site The Motley Fool who cited the last month’s Blue Apron S-1 filing that raised concerns.
Other issues Blue Apron has yet to tackle include its shrinking gross margin and marketing efficiency. But the management remains optimistic, as they expect the IPO to ultimately give them the cash needed to scale their business.
The proceeds from the IPO will certainly go into investing in automation and supply chain technology. CEO Matthew Salzberg showed confidence in the success of the company as they probe its value in the private market at nearly 2 billion and confirm a resurgence of New York’s “unicorn startups.”
For now, Blue Apron’s IPO launch speaks loud and clear about the merging of technology and food subscription services. The competition is already fierce with Plated, HelloFresh and Sun Basket; it only intensifies with the Amazon-Whole Foods merger.
Marco Islas for TechFunnel.com