It seems as though Snapchat is not the only technology company experiencing a tough quarter as Blue Apron also reported massive losses. The company joined a growing list of technology startups that are failing to meet the expectations set by their initial public offerings.
Like Snapchat, Blue Apron’s shares have fallen in value with a reported loss of 47 cents per share. Many experts anticipated a loss of only 30 cents. The stock opened trading down 17%, and the company estimates that its net loss will be between “$121 million and $128 million in the second half while net revenue will fall between $380 million and $400 million.”
The numbers do come slightly as a shock with the number of customers increasing by 23% per year, but the company noted that their customer base also decreased by 9% from this year’s first quarter due to a $26.1 million cut in marketing expenses. According to CNBC, the company said its “average revenue per customer increased to $251 for the second quarter, up from $236 in the previous quarter, but below $264 in the previous year.” This ultimately helped to boost the company’s revenue 18% to $238.1 million and exceeded analysts’ expectations for the first quarter.
Although some criticized their decision to go public, University of Michigan professor Erik Gordon claims it wasn’t a mistake, and stated, “They needed the money to fight the battle… It might have been a mistake to be a buyer of the IPO… But I think going public was probably a good move for the company, despite the fact that their embarrassments are now public.”
In a statement regarding the IPO, CEO Matt Salzberg said, “We are beginning a new chapter as a public company, and remain focused on our long-term strategy to build an iconic consumer brand, develop a more diverse product portfolio, and further build out an end-to-end supply chain platform.”
It is troubling to see many technology startups fail, but with new initiatives and marketing strategies planned, some expect them to dig themselves out of the hole over time.