Blue Apron was one of the first “meal kit delivery” services to hit the market. As such, the company is also one of the most recognizable companies in the industry. Which is why they’re going public. But Blue Apron, just two weeks ago, had set an initial public offering price at $15-17 per share. Now, Blue Apron has slashed its IPO price to $10-11 per share, lowering its valuation by more than $1 billion. Why the sudden slash in value?
Should Traders Buy or Avoid Blue Apron’s Launch?
Blue Apron might be a big name in the online food delivery industry, but it doesn’t have a huge war chest. In fact, the company has yet to produce a profitable quarter. That’s part of the reason the company is going public. An influx of cash would help the meal kit delivery service with marketing and production efforts. But that IPO share price just got slashed with news of Amazon’s surprise purchase of Whole Foods. Now, Blue Apron is going head to head with one of the richest companies in the world as Amazon gears up to dominate the world of meal delivery services.
Can Blue Apron survive?
That all depends on if the Whole Foods deal goes through. Both Krogers and WalMart are rumored to be eyeing Whole Foods as an acquisition simply so that Amazon can’t have its foothold into meal delivery. If either of those competitors can wrestle Amazon’s prize away from Jeff Bezos, that’s great news for Blue Apron. However, for the time being, Blue Apron should definitely be concerned.
Watch the news from CBS News about what to expect from Blue Apron’s IPO:
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For now, though, the slash in price valuation isn’t necessarily a bad thing. There’s less pressure on the company to live up to lofty, splashy IPO expectations a la Snap, inc., which has seen a rollercoaster of price action since its launch in March, and now sits just above its IPO price. Setting the launch at a 33% lower price point also means more traders are likely to buy, since Blue Apron, unlike Snap, actually has a business model and a product, and has potential to produce revenue. At $10/share, Blue Apron’s IPO is worth taking a bite of and buying, with shares expected to go UP.
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