Blue Apron prices IPO at $10, low end of expected range

Blue Apron prices IPO at $10, low end of expected rangeā€

Meal-kit delivery company Blue Apron on Wednesday slashed the price it expects to sell its shares in an initial public offering, a sign that it may be having trouble attracting investors. And, at $1.9 billion, the company's market cap at the IPO price is less than the $2 billion valuation it fetched in its last round of private fundraising, according to Crunch Base. Blue Apron had lowered its price range Wednesday to $10 to $11 from its previously expected range of $15 to $17.

Goldman Sachs Group Inc., Morgan Stanley, Citigroup Inc. and Barclays Plc led the IPO.

Blue Apron also has to deal with traditional supermarkets and the looming threat from Amazon, which is buying organic grocery chain Whole Foods for almost $14 billion.

Blue Apron ships boxes to customers filled with all the raw ingredients needed to make home-cooked meals.

Blue Apron's price cut was the second-biggest decrease in a marketed price range for USA -listed IPOs in the past five years, according to data compiled by Bloomberg. The meal kit company's shares ended unchanged Thursday in their first full day on the stock market. Blue Apron planned to raise $480 million, now cut to $315 million.

Some Blue Apron lovers who rely on the food delivery service to fuel their week are wondering when they can get a slice of this company ahead of its highly anticipated IPO. Instead, the funds will all go toward working capital, capital expenditures and general corporate purposes. About 1 million customers use the product, according to the IPO prospectus.

But Blue Apron isn't making money and hasn't necessarily communicated a clear path towards profitability, which implies the stock doesn't deserve a premium valuation, she continued. Without solid customer retention, it may be hard for Blue Apron to keep up its growth.

Blue Apron had a total stockholder's deficit at the end of March of $183.88 million, but on an adjusted basis, assuming the proceeds of this deal, the company will have a $303.7 million positive equity position.

The company has warned that it may never turn a profit.

The company upped its marketing spend previous year to $144 million, drawfing its 2015 spend, which was $51 million.

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