Blue Apron is in a death spiral.
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Blue Apron is trading at half what it hoped to get in its IPO — a week after its debut (APRN)
Blue Apron is in a death spiral.
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After initially seeking to sell its shares for $15 to $17 in an initial public offering, the company was forced to lower the range substantially last week. It sold the shares for $10, and basically went nowhere on day one — Thursday, June 29.
Since then the stock has dropped 22%, and a week later, it's fetching about $7.78. That's half of what the company thought it might get from investors — at the low end — when it first began to pitch them the shares.
There are a few reasons for this. The most cited is the fact that — while Blue Apron was trying to drum up interest in its IPO — Amazon struck a deal to buy Whole Foods. The worry for Blue Apron is that the combination of Whole Foods reputation for high-quality produce and Amazon's e-commerce know how could dominate the business of selling people fresh ingredients for individual home cooked meals.
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But there's also the issue of customer retention to think about. Even without Amazon in the picture, Blue Apron has only able to keep 23% of customers for more than a year, according to one analysis. About 72% of customers ditch the service after just six months, according to that estimate.
Comparing the company to other subscription services doesn't paint a better picture. Blue Apron can only retain 1/3 of its customers after six months, compared to services like Netflix or the Dollar Shave Club which retain around 3/4 of their customers.
Blue Apron is currently trading at $7.78 and has fallen 3.5% on Friday. The company is currently valued at $1.34 billion, according to data from Google.
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