» [I] t faces a whole host of challenges that need to be factored into the stock price, » said Neil Saunders of GlobalData.
Blue Apron shares edged higher Thursday, their first day of trading on the New York Stock Exchange.
But despite reaching as high as $11 a share — $1 above the IPO price — Blue Apron’s gains are dismal compared with other recent IPOs.
For instance: shares of the year’s most hyped IPO, Snap, popped 44 percent on the first trading day. But even less well-known companies saw big gains out of the gate.
To be sure, the first day of trading is no death sentence. Facebook went public on May 18,2012, priced at $38 per share. It gained only 0.61 percent in its debut closing at $38.23. Snap, meanwhile, has seen shares fall more than 20 percent over the past three months.
« We’re cautious to read too much into Blue Apron’s trading activity today, » said Technomic’s Erik Thoresen. « This is an emerging market and growth is a long-term play. Blue Apron’s success will rely heavily on converting consumers to new ways of sourcing food at home. »
And comparing a food-delivery start-up to a software company isn’t exactly apples-to-apples. Blue Apron is the only meal-kit delivery start-up to go public so far. US Foods, a food distributor that went public last year, gained 8.3 percent in its first trading day.
« I think their public offering is a great mark of validation for the category overall, and aligns with the trends towards an e-commerce-driven world, » said Andy Levitt, CEO of Purple Carrot. « Customers in general are not going into malls; they’re buying goods online. The meal kit market — and the grocery space overall — is ripe for disruption and improvement. This IPO and what comes from it is going to be good for customers, and for investors as well. »
But for investors who backed Blue Apron’s Series D funding round at around $13.33 a share, there may be high expectations for a big payoff.
« I think the trading level reflects the understanding that this is not a business where growth will come easily and quickly. That is not to say that Blue Apron’s business model is poor, just that it faces a whole host of challenges that need to be factored into the stock price, » said Neil Saunders of GlobalData. » I daresay that Blue Apron hoped to benefit from Wall Street’s traditional over-optimism when it comes to online and digital companies. However, I think investors are awake and smelling the coffee on this one. »
Disclosure: CNBC parent NBCUniversal is an investor in Snap .
