In the short couple weeks that yuppie meal-in-a-box delivery service Blue Apron spent on its IPO roadshow, basically everything in the world that could go wrong for the company did. Amazon bought Whole Foods. Snap was Snap. And now:
Blue Apron filed early Wednesday to lower the expected price range for its shares to $10 to $11 apiece, below the $15 to $17 it sought earlier, according to regulatory filings. If the company prices shares at $10, the low end of its new range, the company would be valued below the $2 billion it was valued at in a 2015 fundraising round by investors such as Bessemer Venture Partners and Fidelity Investments. At $16 a share, the midpoint of its earlier price range, Blue Apron would have been valued at about $3 billion.
Pre-IPO share prices tend to vacillate a bit, but shaving off a third of your valuations is a pretty stark drop. Evidently, IPO buyers aren't exactly hankering for a company that loses money sending people $10 meals they have to cook themselves:
Several investors who typically seek shares of newly listed companies are choosing to steer clear of the IPO, according to interviews with fund managers and analysts. Chief among their concerns: that the cost to attract new customers is climbing and the company appears to be churning through subscribers.
This sounds like a tough spot, but there's a solution hiding in plain sight. Blue Apron has achieved “substantially all” of its revenue growth in recent years from new customers lured by steep discounts and trial offers. Why doesn't Blue Apron extends its widely utilized new-customer discount model to new investors? Don't pay upfront for a few hundred shares of APRN – instead, try 'em out for free for a few weeks, see how you like 'em, and if you're happy, go ahead and fork over the $8 a share or whatever they're worth by that point.
It's a win-win. Blue Apron gets the loyal shareholders it wants. And it can do so without having to worry in the short run about making money, which evidently isn't one of the company's central concerns anyhow.