Wondering if APRN stock is for you? Well, let's weigh the pros and cons.
5 Reasons NOT to Buy Blue Apron Stock
1) Originally, Blue Apron said it would aim to sell shares to new investors at a valuation of $3.2 billion, but revised that down on Wednesday to around $2 billion. The big reduction almost certainly reflects a lack of investor demand at the higher valuation.
2) Its marketing costs as a proportion of revenue keep climbing (the opposite of what should occur as a company’s scale increases due to, among other things, greater brand awareness). Related to that point is its difficulty in keeping customers: about two-thirds stop ordering within six months.
3) Most companies target at least a 20 percent “pop” on the first day of trading to kick off their public debut on good terms. The lowering of the offering price combined with the lackluster first day of trading is a bad indicator.
4) If Amazon “disrupts” that market like it has other markets (especially after it bought out Whole Foods), it could be a very challenging environment. Amazon already has a small meal-kit business, delivering ingredients and recipes to customers in a handful of U.S. cities.
5) With a market cap of just below $2 billion, this is a disappointment for the investors who gave the company a $2 billion valuation at the last private round.
5 Reasons to BUY Blue Apron Stock
1) The company's growth has been undeniable, with its revenue surging from just $77.8 million in 2014 to $795.4 million last year.
2) Although their CAC is about $90, each customer on average orders $57.23 worth of food each quarter.
3) Between 2017 and 2020, Blue Apron expects the segment to grow by 8.5% on a compound annual basis.
4) Moreover, the stock now is quite a bit cheaper. Originally, it was going to sell for $15 to $17 per share, now at $10, it may be a good time to grab some.
5) It's been getting its costs under control, an important indicator of future success since you can't rely on investors to fuel your growth forever. It's also got a very young customer base, which means lots of room to keep growing.
So, do you think Blue Apron will simmer?
If you come across a single founder with no in-house tech team, do not give them your money. Outsourcing tech is never a good thing. On top of that, look if the team has knowledge gaps. You want a team with good domain experience, an in-house tech expert and favorably previous startup exits. Teams that have worked together before (and didn't just meet) are also a good sign of a strong entrepreneurial bond.
Product or Service
If it is not really a huge problem (or it has already been solved), then look away from the opportunity. Maybe the problem is their, but the solution doesn't solve it directly. The actual product or service is one of the most important parts, so it better solve a major solution in a unique way. Look for the game changer.
If the startup does not have a customer segment or audience outlined, do not invest. Every company should have a plan on how to actually sell their service or product. Ask for analytics or data supporting how they came to their selected audience and why they picked the strategy or channels that they did. This section should be very detailed and should include in-industry contacts, marketing, business development channels, and proof of interest.
If it is only partially built with no ready release date, do not do it unless you think it is the next Facebook. Traction is what proves if people are actually interested in the product or service. A good way to gauge good traction is looking at usage if it is an app and revenue if it is a product. More than 11-15k per month is great and over 1000 users are great as well. Another indicator of a good investment is previous investment and investors. Usually, if it has 500k or more and is cashflow positive, the startup has something meaningful going on.
If it is a niche market with a clear leader, do not invest. However, if it is a multi-billion dollar market with little innovation or some new entrants but not many...go for it. Ensure the industry is ready for a disruption though if it is a big innovation.
By: Erica Amatori | Insta and Twitter: @ericaamatori
What were the best IPOs of 2014?
Immune design (IMDZ), a bio technology company that develops immune-based therapies to fight cancer, released its IPO in July. Starting out at $12.00, it has now risen to a healthy $35.22. Keep watching this stock.
Lets talk about GoPro (GPRO), which was released in June and has a current price of $79.15 when it started at $24.00. In the very first day, the camera company increased 30% and raised another 27% after the weekend. Investors are definitely anticipating high growth for this company.
ReWalk Robotics (RWLK) shares sore after they downsized to a $36 million IPO. This was the first IPO for local robotics in 2014 and has paid off. They company has produces to products: the ReWalk Personal which is designed for home/work, and the ReWalk Rehabilitation for clinical rehab centers. Opening at $12.00, it is now at $27.90.
Hungry for more? Zoe's Kitchen (ZOES) IPOed in April entering in at $15.00 and now serves up $33.19 per share. Fast, but casual restaurants seem to be a growing trend, such as Panera. Zoe's menu offers fresh mediterranean food delivered with southern charm. Many say this stock is performing so well ever since the chase for the next Chipotle stock has been alive.
Last but not least, one can not forget the most anticipated IPO of the year: Alibaba (BABA). Known as the Amazon of China, the IPO started at $92.70. Early stock holders gained an immediate return of 36.3% on the offer price ($68). Hitting the market at 11:58 am, the stock hit a high of $99.25 almost immediately. Currently, Alibaba is priced at $115.10 and is growing at a fast pace.
Some IPOs to look out for the end of 2014?