Blue Apron is taken a hit as it’s IPO price is down by 4% which brings it to $9.60, a bit down from its original price. Blue Apron was expecting a price range of between $15 and $17, which would have helped it raise even more money, having the company value at $3 billion. Instead, it had to settle for a valuation below $2 billion and a lot of questions about the company’s future on Wall Street.
The company’s debut yesterday shows that it raised as much as money as possible. But, the stock went nowhere on the first day and now dipped below that initial pricing, which means the IPO was equivalent of a down round and the company is going to be held responsible for a whole different set of standards.
The reasons to WHY this is happening – one possible reason is that It’s easy to point to the shadow of Amazon making a huge $13.7 billion bid for Whole Foods and the massive looming threat that poses. After all, Amazon specializes in logistics and delivery, and it just purchased hundreds of stores that have access to fresh food and ingredients. It seems like a small effort to build a product like Blue Apron which a Uber for Food delivery services clone within the empire. Amazon, too, has shown a willingness to bulldoze into areas that may seem semi-unrelated to its core business of selling products online like buying Twitch and running servers.
Yet, Blue Apron is spending a lot of money getting customers, and it’s not definite if those people are sticking around for long. The company burned through more than $52 million and it added around 160,000 customers. The company’s customer base is growing, but that’s a huge investment in acquiring new customers and hoping they order food on a regular basis. Either the company is having trouble getting them on board, or they are churning a lot and just trying the product as an experiment or using it once or twice a month.
The company will have to create major demand amongst their products to return on that investment. the aggressive burn and what seems like a slow ramp up may be hindering the optimism for the company in the short term. It also likely doesn’t help that a huge portion of the company’s customers are a younger audience, which may be more fickle or not have the buying power of an older set of customers. Blue Apron was able to post a small profit earlier in its life, but it needs to figure out a way to sustain that and grow it into a real sustainable business. Until then, its stock will likely suffer, which may lead to problems with keeping and hiring talent as companies can lock up a lot of compensation in stock.
Blue Apron definitely will need to buck up if they want to be in the race. At Appdupe you have our full support and guidance with your app and your idea, you can depend on us to build the most efficient apps to generate a large amount of revenue. Do get in touch with us for the most kick-app scripts : Uber for X
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