![]() Organic food delivery service Sun Basket, founded in 2014, could very well reconsider its plans for an IPO later this year.Īs a result, consolidation in the meal delivery industry could come much sooner than anyone may have thought. ![]() These early challenges don’t bode well for other potential IPOs in this space, either. Instead, it may be forced to increase borrowing under its revolving credit facility yet again.ĭespite the name appeal and being a leader in a popular category, Blue Apron's financial challenges are only likely to worsen as more retailers enter the space and the company is forced to get more aggressive in acquiring and retaining customers. A secondary offering is in the works, but the company could face an uphill battle in getting investors to bite. Following its IPO, the company is using the money for company operations rather than paying down its debt. This upside-down and unsustainable business model operating in an increasingly crowded and competitive online food delivery market is not exactly what one would call a Wall Street darling.īlue Apron’s stock is already down about 20% since its IPO, closing at $8.06 a share Thursday from its IPO price of $10 a share last week. Marketing expenses increased 180% last year, well outpacing revenue gains of 133%. Company revenue grew from $78 million in 2014 to $795 million in 2016, but at the same time its losses increased to $55 million last year from $31 million two years earlier.Ī huge concern is that about a fifth of Blue Apron’s spending goes towards getting people to try its services. The company, founded in 2012, noted several risks in its company prospectus - including the high cost of acquiring and retaining customers, changing consumer preferences and the possibility that it may never post a profit. Is the unprofitable Blue Apron a wise investment? And should another round of public funding fall through, what other avenues are available? The meal kit-delivery service has already acknowledged it requires more cash to sustain operations let alone pay down any debt. ![]() Blue Apron is spending a lot of money to acquire customers, which gains valuable market share - but also puts it deeper in the red.
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