Morning Report: Blue Apron Opens Up A Disappointing 6% After Basement Pricing, Down-IPO

Update: Blue Apron ended the day at $10.01 or $10.00 depending on where you look. Given how far the company had to lower its IPO range to get out the door, it’s a poor result. It also underscores the persistent gap between public and private valuations that we continue to see sorted out through difficult liquidity events.

In after-hours trading Blue Apron is underwater:

Morning Report: Today was an awful morning for IPOs, but, hey, Blue Apron is now a public firm.

This fogged-out morning was set to bring two IPOs: Blue Apron, for $15 to $17 per share, stiffly up from its last private valuation, and Tintri, a cloud firm that was going public despite staggering losses and a curtailed valuation. One up, one down, two IPOs.

Instead, Tintri yanked its offering at the last minute and Blue Apron cut its range to $10 to $11, priced at $10, and today, in early trading, can’t even make it to the $11 mark. For private market investors hoping for liquidity, this was a lacking result.

Blue Apron’s Discount

At $15 to $17 per share, as Crunchbase News previously reported, Blue Apron would have been worth up to $3.2 billion, sharply more than its last private valuation of just over $2.1 billion.

But when the firm set its final price, as MarketWatch notes, Blue Apron was worth just $1.9 billion (I reported the same fact with less eloquence, sadly). So it’s a down IPO, a dilutive public fundraising event at a lower price.

Still, $10 multiplied by 30 million shares works out to 300 million dollars, a welcome result for the company.

Before its IPO, Blue Apron had raised around $194 million in total. Why might Blue Apron need the cash, aside from the fact that it is losing an increasing amount of money over time? Don’t forget that the firm had started to rack up debt.

From its S-1, the following:

Long-term debt, net of debt issuance costs, was $44.5 million as of December 31, 2016 and $99.6 million as of March 31, 2017. We did not have any debt prior to 2016. In May 2017, we issued and sold $63.5 million in aggregate principal amount of convertible notes to entities affiliated with Fidelity, and in June 2017, we issued and sold an additional $1.1 million in aggregate principal amount of convertible notes to certain of our other existing stockholders.

The convertible notes converted to shares at a discount in the firm’s IPO, but the long-term debt persists. In short, Blue Apron lost more than $50 million in its last quarter and has around $100 million in debt. Picking up a few hundred million to pay the bills is a welcome result.

Here’s the chart from the IPO that made it across the finish line:

Yuck.

From the Crunchbase Daily:

Blue Apron IPO hits the market

• Meal kit delivery service Blue Apron raised $300 million in its IPO, pricing shares at $10 each. The price is a reduction of about 40 percent from the high end of Blue Apron’s initial projected share price range. Shares were up about 5 percent in early trading this morning.

Kinetica raises $50M Series A

• Kinetica, a provider of technology for high-speed visualization and analysis of large datasets, announced that it has closed a $50 million Series A round led by Canvas Ventures and Meritech Capital Partners. The San Francisco-based company, which has its roots in work done for U.S. intelligence agencies, sells its technology to government and enterprise customers.

Market research funding up, deal count down

• So far this year, market research startups have raised $360 million, over double the amount raised in all of 2016, Crunchbase News reports. Yet the number of companies securing investments has fallen, continuing a pattern of unicorns eating up an outsized share of funding.