Coverage: Blue Apron’s IPO could go between $15 and $17/share

Meal kit delivery company Blue Apron filed an update for its initial public offering with the Securities and Exchange Commission on Monday and is pricing its stock at $15 to $17 per share, which would raise $480 million.

Angelica LaVito of CNBC.com had the news:

The company plans to offer 30 million shares for $15 to $17 each, raising about $480 million at the midpoint. At that range, the implied market value of the company would be $3 billion. It intends to use part of the proceeds to repay outstanding borrowers $125 million and the rest for investing in its business and other corporate purposes, according to the filing with the Securities and Exchange Commission.

Blue Apron’s net revenue has grown tenfold to $795.4 million last year from $77.8 million in 2014. Before taxes, interest and other expenses, it lost $43 million last year, up from $26.5 million in 2014.

Blue Apron customers subscribe to receive a kit with a recipe for a meal and the ingredients required to make it. The company’s mission is to “to make incredible home cooking accessible to everyone.”

Customers can choose from two main plans: one for two people, and one for four people. The first plan provides three meal kits a week for two people, totaling $59.94, or $9.99 per person. The second provides either two or four meals a week for four people for $71.92 and $143.84, respectively, or $8.99 per person.

Michael de la Merced of the New York Times reported on Blue Apron’s competition:

Blue Apron also faces meal-kit competition from HelloFresh, Sun Basket and Purple Carrot.

Such companies were founded on the premise that customers want fresh ingredients and the convenience of home delivery with the satisfaction of actually preparing their meals at home.

Blue Apron is likely to argue to prospective investors that its niche in the food-delivery service is significantly different from the more general service that Amazon offers through PrimeFresh.

Founded in 2012, Blue Apron is well known among the cognoscenti of podcasts and other media popular with millennials.

That popularity has been a result of aggressive marketing. Blue Apron’s marketing expense is enormous, and it has been growing, jumping tenfold from 2014 to 2016, to $144.1 million.

Now the company is hoping to capitalize on its growth by pursuing an initial public offering. It is taking that step with the public markets appearing more welcoming to debutantes: The number of offerings tripled, to 25, in the first quarter of this year from the same time last year. Such offerings raised nearly $10 billion in proceeds in the quarter.

Alex Wilhelm of TechCrunch noted that other large private tech companies have had successful IPOs recently:

After a period of sharply positive sentiment regarding private tech companies, leading to the unicorn boom, uncertainty about potential public valuations and tighter markets led to concern about what would happen to late-stage tech shops looking to go public.

When Cloudera went public in late April, the stark difference between its last private round’s valuation and its IPO valuation was unsettling. It wasn’t a positive signal, and it wasn’t the first time that a company crossing the private-public divide landed on the other side of the chasm with a smaller valuation than it had started out with.

Down IPOs, like Box’s, say, are part and parcel of the current cycle’s picture.

The resulting sentiment led to a new phrase: Flat is the new up, up, up, up, up, and so forth. The implied follow-up to the point is that down is the new flat. Valuation humor aside, things aren’t as bad as you might have thought, at least regarding this year’s unicorn IPOs.

And Blue Apron’s own IPO cycle makes the point for us. Let’s take a look back at this year’s tech IPOs that were either worth around $1 billion (or more) when private, or worth at least that much when they went public. You might be surprised.