the Blue Apron (APRN) offering

Meal delivery service APRN (originally named Petridish Media) went public yesterday at an offering price of $10 per share through an underwriting syndicate led by Goldman Sachs.

The original pricing range was reportedly $15 – $17, but was reduced to $10 – $11 after Amazon and Whole Foods announced their intention to merge.

The stock traded as high as $11 yesterday, before fading back to the offering price later in the day.  I didn’t watch the stock and there’s surprisingly little price information from yesterday’s trading available this morning, but it seems as if the underwriters made few (if any) “stabilizing” purchases at $10 to keep the stock from closing below the offering quote.

Today APRN opened at $9.98, slipped to $9.50, and is trading at around $9.70 or so as I’m writing this.

Although I have zero interest in owning APRN at this point, I think it’s an interesting issue from a number of perspectives:

–the concept is, I think, for APRN to be the “first mover” in home meal kit delivery.  Doing so would give it brand recognition and scale that rivals starting up later would find difficult to match.  Whether APRN can achieve this position remains to be seen

–as I read the prospectus (meaning: I find it hard to believe what I’ve read), 100% of the proceeds from the offering are going to the company.  None of the VC backers or otheer insiders are cashing out any portion of their positions.  If so, this is either very good (they think APRN is a gold mine) or not so much (they don’t want to scare away buyers)

–APRN is an “emerging growth company,” listing under the provisions of the Jumpstart Our Business Startups Act (JOBS).  JOBS allows early-stage companies to go public without meeting all the SEC-mandated disclosure requirements for public companies.  This makes the financials hard to interpret.  Still, it seems to me that there may be a serious deterioration in APRN’s working capital during 1Q17

–the main metrics/issues for APRN are the cost of acquiring a customer and its ability to retain one once acquired.  Again, it’s hard to get a good read, but Wall Street’s apparent worry–apart from AMZN/WFM–is that the answers to these questions are “high” and “low.”

All in all, the risks of APRN are too high for me, but this will be an informative one to watch.





2 responses

  1. I just don’t see Blue Apron making much money going forward. People either want to cook or they don’t want to cook. Those that do aren’t going to want to pay a bunch extra to have someone gather the food for them, plus they aren’t going to want to have so much done for them. Kind of like expecting painters to be excited by color by number sets. Those who don’t really want to cook regularly – Blue Aprons core audience, I think – will probably buy a few meals, then decide it is too much hassle to clean up a pan or two and head back out to eat. Those who find they do like cooking will graduate to buying their own food and using recipes.

  2. Note the silliness of the JOBS act. The government makes it hard to start a public company, which discourages people from taking the step. Instead of just making it easier for everyone, they ease the regulations, but only for special situations, and then act like they are job creators. Either the regulations are important or they are not. Imagine how different it would be if all you needed to do to start a business was find a place and start selling, and all you needed to do to go public is start selling shares. Many of the great companies out there today started in that environment, and now they are the ones pushing for all of the regulations to keep out competition.

Leave a Reply

%d bloggers like this: