Blue Apron seeks IPO valuation boost despite Amazon-Whole Foods fears

Food-delivery startup Maple announced it was shutting down earlier this year about a year after SpoonRocket made a similar announcement.

While Amazon's recent acquisition of Whole Foods may give pause to anyone thinking of investing in the meal service space, there is still a lot of hype surrounding Blue Apron's IPO, since it's the biggest consumer tech IPO since Snap Inc.

The firm, which has more than 5,100 employees, plans to sell 30 million shares for between $15 and $17 each, according to the filing.

As Amazon.com Inc. dives harder into food, Blue Apron Holdings Inc.is showing little fear in seeking a higher valuation.

As Blue Apron argues that its business model is different than Amazon's service "Prime Fresh", investors may be hard to convince, we will see... The $59.94 box, with recipes such as sesame soba noodles and soy-marinated chicken thighs, includes ingredients for three meals for two people.

Management also plans to point out that the so-called total addressable market in the US still provides opportunities for growth, the person familiar with the matter said.

Blue Apron, founded in 2012, posted a net loss of $54.9 million a year ago, but revenue more than doubled to $795.4 million. And even if Blue Apron does emerge victorious, who's to say meal kits will remain popular with consumers. The average order value fell to $57.23 from $59.28 in the same period, while average revenue per customer slipped to $236 from $265.

Perhaps the most telling figure is that Blue Apron is significantly increasing how much money it is looking to raise in the IPO - from $100 million to now more than $500 million -a sign that it's going to need more ammo to win the prolonged meal kit fight.

The underwriters for the offering are Goldman Sachs, Morgan Stanley, Citigroup, Barclays, RBC Capital Markets, SunTrust Robinson Humphrey, Stifel, Canaccord Genuity, Needham, Oppenheimer, Raymond James and William Blair. Sun Basket focuses on organic ingredients.

Experts said Monday, though, that Amazon's Whole Food move may not affect Blue Apron in the short-term and could even help the company. The company plans to use the proceeds to pay down an existing credit facility and for working capital, capital expenditures and general corporate purposes.

Vanessa Coleman

Comments