Why Blue Apron's lackluster debut may be a good thing

Shares of Blue Apron had a bland market debut on Thursday, as investors proved wary of the meal-kit provider and its initial public offering. And their concerns about the votes may be at least one factor weighing down Blue Apron's IPO.

Now that Blue Apron is public, it will have to think harder about the cost of acquiring and keeping its customers as other meal kit companies such as Hello Fresh and Plated are also fighting for market share.

The latter's $13.7 billion deal to buy Whole Foods Market Inc has weighed on prospects for the meal-kit industry and the IPO price cut was ssen as a possible sign of the difficulty Blue Apron is having attracting investors.

Many institutional investors have already put their names down and are expected to pay around $10 to $11 a share for an offering of about 30 million shares, which is down from the initial $15 to $17 a share.

After opening at $10 - level with the IPO price set the day before - the company's shares reached a high of $10.65 before creeping back down.

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CEO Matthew B. Salzberg was on CNBC just before the start of trading, telling host Carl Quintanilla and correspondent David Faber that Blue Apron is not scared of Amazon.Said Salzberg, anything Amazon can do to bring e-commerce habits to retail grocery is good for his company.

Blue Apron's $2 billion private valuation came with a June 2015 funding round of $135 million, led by Fidelity Management, according to The Wall Street Journal.

Blue Apron's IPO may have a broader impact, however, on similar meal delivery startups looking to go public. Its net loss widened to $54.9 million in 2016 from $47 million a year earlier, despite net revenue climbing to $795 million from $340.8 million in the same period, the prospectus shows.

Since its inception, Blue Apron has scaled rapidly, developing its expertise and an ever-more ambitious vision.

The company had initially sought to raise $510 million, which would have given it a market value of as much as $3.2 billion. The stock has been approved to list on the NYSE under the ticker symbol "APRN". It had 1,051 full-time employees in 2014 and now has 5,202 as of March 2017.

(Copyright © 2015. All Rights Reserved.)
 
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