Food delivery company Blue Apron, which is preparing to go public, has reportedly cut its initial public offering (IPO) price by a third as of Wednesday, June 28. The news came hours before the shares were slated to price.
According to a report in Bloomberg, the startup is now selling 30 million Class A shares for $10 to $11 a share, a lower figure than the $15 to $17 a share on which it had originally planned. Bloomberg noted the lower pricing comes as food delivery companies are facing competition from the likes of Amazon, which recently inked a deal to buy Whole Foods for $13.7 billion.
With lower pricing for the IPO, Blue Apron‘s value declined to $3.2 billion from $2.1 billion, a figure Bloomberg determined based on outstanding shares following the IPO offering. The company is expecting to raise $310 million compared with its previous target of $510 million, noted the report. Additionally, Blue Apron’s management is on a campaign to show its business model differs from grocery delivery services.
Meal kit pioneer Blue Apron filed to go public earlier in June, but that doesn’t mean it has won the startup game. From 2014 to 2016, the company grew its revenue from less than $80 million to nearly $800 million, but it saw an increase in losses from $31 million to $55 million. New growth was fueled by new customers, and those customers were far easier to acquire in a nascent market. Blue Apron reported spending approximately $94 in marketing per new customer in 2014, but that number has grown to approximately $460 per new customer as the market became saturated.
Things will have to change if Blue Apron continues its efforts in the public sphere. The company plans to add to its products and options to improve revenue from existing customers. Consumers will also have better control over the number of weekly meals delivered and more flexibility in wine selection. Currently, this option is only available on a monthly basis.