Wall Street appears to have lost its appetite for Blue Apron.
Blue Apron, a meal kit delivery service, barely budged above its IPO price in its debut on the New York Stock Exchange Thursday.
The stock opened at $10 a share, briefly ticked up by as much as 9% in early trading only to end the day right back at $10.
The flat performance came after Blue Apron slashed the price of its initial public offering — a rare move for a consumer tech company. Blue Apron priced its IPO at $10 a share on Wednesday night, down from its previously planned range of $15-$17.
Blue Apron is now worth about $2 billion, or roughly what the company was valued at on the private market in 2015.
At least some of this can be chalked up to investor concerns that the competition may eat Blue Apron’s lunch. Just days after Blue Apron filed for an IPO, Amazon shook up the food industry with its blockbuster deal to buy Whole Foods.
“Already, it is a competitive business. People are worried about Amazon and Whole Foods and what that may mean for the entire market,” says Kathleen Smith, principal at Renaissance Capital, which manages IPO-focused exchange-traded funds.
Even before the Amazon deal, Blue Apron faced a crowded market. It is just one of several very well funded startups that mails boxes of fresh, pre-measured ingredients with recipes included. Other startups include Plated, HelloFresh and Sun Basket.
To stay ahead of the competition, Blue Apron has spent heavily on marketing. It invests in TV commercials, outdoor ads, countless podcasts and promotional offers to continue growing its customer base.
Blue Apron’s sales hit nearly $800 million in 2016, more than doubling from the year before, according to its IPO paperwork. But the company lost about $55 million last year, up from $47 million a year earlier.
“There are uncertainties ahead,” Smith says. “The market is asking for a discount for those uncertainties.”
Blue Apron isn’t the only flashy tech company to stumble onto Wall Street. Snapchat, the biggest tech IPO of 2017, is now barely teetering above its March IPO price. Both companies face concerns about competition and have struggled to justify their lofty private valuations to public investors.
Blue Apron’s IPO may have a broader impact, however, on similar meal delivery startups looking to go public.
HelloFresh, an international operation with more than $350 million in funding, has reportedly also flirted with going public. Chef’s Plate, a startup based in Canada, is planning an IPO in the next year or two.
“If Blue Apron does really well over the next year… you are going to see people saying, ‘Let’s see the next public company,'” says Paul Holland, a partner at Foundation Capital who has invested in the food market. He says it could be big enough for “three or four” similar publicly traded businesses.
And if Blue Apron’s IPO ends up being a flash in the pan? “That’s bad news for everybody,” he says.
