In some cities, Amazon already sells meal kits with recipes created by home goods mogul Martha Stewart. That has raised concerns that Blue Apron is vulnerable to deep-pocketed rivals. Other competitors include HelloFresh and Plated. Like many other internet startups, Blue Apron also has a history of financial losses, and it is unclear whether it can continue adding enough customers to drive growth.
CEO Matthew Salzberg dismissed concerns about competition. He said in a TV interview Thursday that more competition will only help convince people to skip the supermarket and buy their groceries online. Salzberg, 33, co-founded Blue Apron five years ago.
It spent nearly 70 percent of last year's revenue on food, shipping and other expenses related to running the company, according to government filings. Each box comes with pre-portioned raw meat, seafood and vegetables, as well as seasonings. There are also recipe cards to help customers cook up meals such as basil fettuccine or quinoa burgers.
Blue Apron said it had more than 1 million customers at the end of March. That is important as the economic clock ticks closer to recession and the stock market softens — December has been the worst December for stocks since — and more richly valued start-ups aim to go public. It is unfortunate that Amazon acquires Whole Foods during your roadshow, but underwriters want to get paid and VCs want to cash out," the IPO attorney said. A Blue Apron spokeswoman said the company is confident in its strategy to accelerate its path to achieving profitability on an adjusted EBITDA basis in both the first quarter of and for full year Our course has not changed.
Creating value for our stakeholders is a top priority we are bullish on our future," the spokeswoman said, and she also pointed to a deal announced this week with WW formerly Weight Watchers. The company laid off 4 percent of its staff in November and after years of high marketing expenses said that it was shifting its strategic focus to the 30 percent of customers that generated the majority 80 percent of its revenue. Smith said there are plenty of straightforward lessons for investors from the Blue Apron stock story.
Avoid companies with highly negative cash flow. Beware of companies that do not provide investors with understandable unit economics — e. Don't underestimate competition, both big guys e. Plated, Sun Basket who have lots of venture money to operate unprofitably. Plated was recently acquired by Albertsons and Home Chef was acquired by Kroger. The situation for Blue Apron remains uncertain.
Revenue decreased 16 percent quarter-over-quarter. For investors who got in on the IPO or the first-day of trading, any reasonable premium isn't going to get anywhere near their money back, but Lutzker said unless significant shareholders — someone with a stature like Carl Icahn — want to litigate over the price in a deal, "most shareholders don't hold enough value to hold up deals," even at prices they don't like.
In the case of Blue Apron, as has been typical of recent tech IPOs, public shareholders don't have full voting rights. Blue Apron's IPO included the multiple share class structure that has become common in tech IPOs, with insiders holding shares worth 10 votes to each public shareholder's single vote. At the time of the IPO, 30 million single-vote Class A shares were being offered versus a total of million Class B ten-vote shares being held by founders, company insiders, venture firms and other investors.
Smith put it bluntly: "10 to 1 voting control means that the interests of public shareholders do not matter in the decision making. But Ritter said even insiders might be willing to make a deal. Some of these other start-ups, say a FitBit or a GoPro or a Groupon or a Zynga, might have seemed to make sense for an acquirer after being beaten-up in the public market, but years later, are still stumbling their way through life as a stand-alone stock. Ritter pointed to a more difficult problem to solve that helps to explain why takeouts don't materialize even at depressed values: "The more likely reason is that potential acquirers don't have an obvious plan to turn the company into a money maker.
Some of the stock declines are not due to failure of the business, but failure to live up to lofty expectations. That reality is important for individual investors before they are shopped the next great initial public offering: Be able to tell the difference between a true competitive advantage and an easily duplicated commodity. It is not just a question of being first.
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