Will Blue Apron's Lukewarm IPO Be Able to Compete with Amazon?

Blue Apron

Blue Apron

The meal delivery service, Blue Apron made its debut on the New York Stock Exchange last week, but it looks like Amazon may have spoiled its IPO.

Blue Apron collected $300 million in its lukewarm IPO, but it will need more funding to stay afloat.

The company reported that it made $800 million in annual revenue last year and had 54.9 million in losses. However, it reported that its cash and current borrowing capacity will only support the company for at least a year. This isn't going over well with investors.

“People should be concerned that they say they’ve only got 12 months. If you’re IPO-ing and you’ve only got a 12-month runway, you’re going to be appealing to momentum players and not long-term holders of your stock,” said James Gellert, chief executive officer at the firm RapidRatings to Bloomberg.

The company closed at $10 on its first day, pegging its value at $1.9 billion. This is less than the $2 billion valuation it earned back in 2015 during its private funding round.

Besides being strapped for cash, Blue Apron will have to compete with Amazon, which will be entering the food-delivery space with its new acquisition of Whole Foods.

The company has other competitors with a similar home delivery model, including HelloFresh, Plated and Sun Basket. Blue Apron’s box, that serves two, costs $59.94 box for three meals. The company reports that it has 1 million customers that use its product. 

Earlier this week. the food delivery company traded up 3.5% on Monday. However, the shares still closed at $9.67, less than the $10 IPO price. Could Blue Apron be on the verge of a rebound?

The company will have to address some of the problems its facing first, like having a free cash flow deficit, high marketing expenses, and its need to expand fulfillment centers.

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