Okay the word of the day Monday was ‘really’ and summed up the reaction of analysts and investors to the planned IPO of Blue Apron Holdings Inc, the meal ingredients company.
A number of seasoned market watchers were a little incredulous at the move, coming as it did less than three days after Amazon.com Inc’s (NASDAQ:AMZN) US$13.7bn move for Whole Foods Markets (NADAQ:WFM) – and the coverage has largely mirrored that scepticism.
It is assumed that Amazon, with its newly-acquired footprint in the grocery space, will stomp on newbies such as Blue Apron.
However, the company’s advisers don’t seem to be particularly perturbed. Either this or they’ve decided simply to go hard rather than go home, as it were.
The IPO could give the business a US$3.2bn valuation, around US$1.2bn higher than the firm was worth in private ownership. It will issue shares at US$15-$17 each, raising around US$590mln in the process.
But while most of Wall Street was looking at the looming juggernaut that is Amazon, one keen-eyed amateur analyst seems to have spotted a more pressing problem for the business.
His/her Twitter handle is Modest Proposal points to an alarming increase in churn despite a punchy cost per gross addition (we are not reporting this as fact; it is merely an observation).
Blue Apron updated S-1. Using disclosed average CPGA of $94, monthly churn has risen from 7% to 18%, implying 5.5 mo avg customer life. pic.twitter.com/m25VCSzhVd— modest proposal (@modestproposal1) June 19, 2017