Last week, Blue Apron jumped for a market debut. Since then, industry analysts are more and more convinced that this crucial decision was hastened by the company’s biggest rival, Amazon. The online retail behemoth acquired all of a sudden Whole Foods. With its large expertise in logistics and vast resources, this acquisition can turn into a fierce competitor that dominates the market. This might explain why Blue Apron’s IPO performance keeps going down.
Blue Apron Was Valued at $3 Billion in 2016
Last Thursday, Blue Apron went public. Despite this large achievement for the company itself, the odds are not aligned with it. As a consequence, over the weekend the shares were already down 7% to $9.34. Considering the fact that expectations pointed at $15-$17 per share once the company enters the market, the actual registered value was low to begin with. Back in 2016, Blue Apron was worth $3 billion as a promising startup.
On the other hand, investors interested in this business should solve a riddle before plunging into this business opportunity. It is unclear whether the timing wasn’t good for Blue Apron to go public considering Amazon’s bold move or if the business model is downright unsuccessful. It would probably need a long-term analysis to clear the mystery.
The Weak IPO Performance Might Be Due to a Low Return on Investment
On the other hand, Blue Apron might be rushing into business. The company is obsessed with its customer database, and it is willing to spend vast budgets to attract possible targets. As a consequence, there were 160,000 customers who were lured in at the expense of $52 million worth of investments. Even though the client base is higher than ever, the financial implications might be too big to justify their results.
Therefore, the issue might be about the product concept itself. The enrolled customers might just test the services once or twice just to become inactive. As a consequence, Blue Apron’s IPO performance might continue to remain low unless the company finds a way to energize its return on investment.
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