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Blue Apron serves up lukewarm IPO


In the public sphere, the New York-based meal kit delivery service's IPO comes at an unsettling time as the markets begin to digest Amazon Inc.'s (AMZN) industry-transforming $13.4 billion acquisition of Whole Foods Market Inc.

Online meal-kit company Blue Apron Holdings slashed the expected pricing range for its initial public offering amid growing concerns about the potential impact from Amazon.com's deal to buy Whole Foods.

At $10 a share, believers in the stock suggested the IPO should value the company around $1.89 billion. Blue Apron had lowered its price range Wednesday to $10 to $11 from its previously expected range of $15 to $17.

Blue Apron's listing is being led by Goldman Sachs Group Inc, Morgan Stanley, Citigroup Inc and Barclays Plc.

Blue Apron delivers quality, pre-measured ingredients with original recipes so customers can cook at home without planning meals and grocery shopping. The company lost $52 million, swinging from a year-earlier profit of $3 million. More importantly, they want to know how much that slice will cost them.

While Blue Apron saw a 133 percent increase in net revenue to $795 million a year ago, marketing expenses increased 180 percent to $144 million, according to its deal filing.


Blue Apron said it plans to use the money it raised to boost spending on technology and marketing to continue its expansion.

Blue Apron intends to use the net proceeds from this offering to repay indebtedness, with the remainder going toward working capital and general corporate purposes.

CEO Matthew B. Salzberg was on CNBC just before the start of trading, telling host Carl Quintanilla and correspondent David Faber that Blue Apron is not scared of Amazon.Said Salzberg, anything Amazon can do to bring e-commerce habits to retail grocery is good for his company.

To stand out, Blue Apron has had to resort to generous offers for customers, including 50% off, $40 off, and 4 free meals. In its IPO prospectus, the company warned that it may never be profitable, adding that it anticipates that "operating expenses and capital expenditures will increase substantially in the foreseeable future".

Blue Apron revenue rose by a blistering 133% to $795.4 million in 2016 from the previous year.

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