Blue Apron, a meal kit delivery company that delivers ingredients for select recipes to your doorstep, is believed to be one of the most successful meal delivery companies ever created. On Monday, the company began marketing its IPO.
The industry that comprises several companies from around the world such as HelloFresh in Europe, is extremely threatened by Amazon’s acquisition of Whole Foods. Thus, Blue Apron is seeking to raise funds in order to sustain and grow amidst stiff competition.
Although Blue Apron made revenues of $800 million last year, they closed 2016 with a loss of $54 million, as declared in paperwork filed with the U.S. Securities and Exchange Commission. The company currently exceeds 5,100 employees and according to its prospectus, it seeks to sell 30 million shares at a price band of $15 to $17 per share in order to raise $510 million.
“It’s going to take some time to figure out the impact of the acquisition on food delivery, and there are a lot more available ways to raise money when you’re public than when you’re private,” said Kathleen Smith, a manager of IPO-focused exchange-traded funds at Renaissance Capital with reference to the Whole Foods acquisition and how Blue Apron plans to combat this threat.
Blue Apron’s IPO filing notes a valuation of $3.2 billion on the business, that is, a 4x multiplier on last year’s revenue. This multiplier is higher than that of its peer, Wayfair, which used 1.8x for its IPO.
This valuation indicates that Blue Apron, which was founded in 2012 by Matt Salzberg, Ilia Papas and Matt Wadiak, believes its brand popularity and massive growth should override its lack of cash flow and entice investors to buy-in.
Megha Shah for TechFunnel.com