August 11, 2017
Alex Wilhelm is the Editor in Chief of Crunchbase News, covering the intersection of startups and money.
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After falling short of expectations, shares of Blue Apron and Snap have steeply dropped.

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The two firms stand out from the 2017 IPO cohort because they are not enterprise-facing software companies. In a year that has been marked largely as an enterprise exit cycle, the two companies are carrying weight for a host of still-private consumer-oriented startups.

Let’s quickly examine their respective declines and ask ourselves what those declines might mean for stalemated unicorns.

Why Do We Care?

But first, why do we care about the short-term gyrations of two newly public companies? It’s a fair question. Before we get too far into their recent price action, let’s answer it.

Crunchbase News has a general focus on private companies for two reasons:

  1. Private companies are generally more interesting and more opaque. But, if you cover venture, startups, and young companies, you cannot avoid spending time on exits.
  2. If you cover exits, you must pay attention to IPOs. That’s precisely why we keep tabs on the 2017 IPO crop. Its performance will impact the ability and willingness of nearly-mature private companies to pull the trigger.

Therefore, the bigger the company, and the better-known they are, the bigger a deal the IPO is. Therefore, Snap and Blue Apron are important companies to keep an eye on.

And when they both take a punch, we should sit up.

Failings, Fallings

Shares of Blue Apron are worth $5.04 today, off nearly 50 percent from its IPO price, following a massive correction in value after its second quarter earnings came in weak, lacking, and odd.

  • The weak: Blue Apron’s losses were worse than expected.
  • The lacking: Customer numbers fell from the first quarter, and revenue per customer fell compared to the year-ago quarter.
  • The odd: Blue Apron expects to produce less revenue in the second half of this year than the first, which is, well, odd.

The company traded just under $6 on Monday and Tuesday. On Wednesday, its shares pushed over $6. In pre-dawn trading Thursday, before its earnings report, Blue Apron managed to scoot above $6.50. Now it’s worth a single fiver.

For the huge number of private companies that work in consumer-facing food businesses, this is bad news. Think Instacart, Postmates, and every other partial-comp to the company. And Blue Apron’s results are doubly bad for companies that are direct competitors.

Shares of Snap are worth $12.15 today, off 11.76 percent from their prior close. That’s an improvement, as Snap traded around the $11.50 mark at times yesterday after its earnings report came in as a triple miss. The firm brought in less revenue than expected, lost more money than expected, and grew its userbase more slowly than expected.

It marked the second time out of two that Snap had missed analyst expectations, and the failure to do so was met with stiff response in the public market. Snap is now off 28.53 percent from its IPO price, 49.38 percent from its first day open price, and 58.73 percent from its all-time high of $29.44.

For money-losing unicorns currently betting that growth is enough, this is a tenuous position to be in. This is probably more true for consumer-oriented companies that are closer comps to Snap, but the lesson is clear: You can lose so much money that growing your revenue by 200 percent year-over-year as a public company is not enough.

Good News, Etc.

From our list of 2017 tech companies, only three are below their IPO price: our two friends above and Tintri. The rest are up—sometimes from stiffly discounted IPO prices, but up all the same.

That’s something. And meanwhile, no missile has landed on our heads yet. That’s nice.

Illustration: Li-Anne Dias