Morning Report: What happens when you raise money from tech investors at a tech valuation but when you go public the public market doesn’t think you are a tech company?
Shares of Blue Apron are down 6.4 percent in early trading today as the company continues to struggle in its first days as a public company.
Initial trading sessions can misdirect of course. Snap had a gangbusters early run, only to see every ounce of pop excised from its share price. It now trades for a few dimes over its initial $17 price. And, famously, Facebook struggled after its IPO during its industry’s mobile transition. So much for those lows.
But, the change in Blue Apron’s worth from its private valuations, to its initial IPO expectation, to its final pricing, to its ensuing performance is notable. Not due to the financial chop, really, but instead because I wonder if Blue Apron will be able to attain, or, perhaps, maintain a technology or growth multiple.
The issue came up on Equity last week — start around the 9:30 mark here for the chat — and it’s a curiosity. If Blue Apron is being revalued not due to changing financial performance, but a changing categorization of its business, it’s something that could impact other firms that we tend to count under the technology unicorn aegis.
Lending Club and Honest came up in the discussion as examples, one exited and one not, of things that market has not, or may not award a traditional tech price-revenue multiple. And if you can’t get to a SaaS price-revenue multiple, for most unicorns at least, you are underwater.
For the sake of the discussion, let’s remind ourselves of Blue Apron’s path up, and then down. We’ll kick things off in 2014, with its Series C:
- April 2014, Series C: $500 million post-money valuation;
- June 2015, Series D: $2.135 billion post-money valuation;
- June 2017, proposed IPO valuation: Around $3 billion at midpoint;
- June 2017, final IPO valuation: $1.9 billion.
- July 2017, market price: $1.78 billion. (As of the time of writing; Google Finance data.)
And that is what I’d call not a repricing, because that phrase implies a company’s value is reset along new (usually lower) growth estimates. Instead, that looks like Blue Apron was reclassified. And if Whole Foods is worth just 0.8x its sales, and that’s a strong result for its cohort, perhaps Blue Apron is lucky to trade where it does today: 2.1x.
Still, the firm is worth billions and raised a fresh dollop of cash so let’s not be overly negative. Let’s just pay more attention to market comps.
From the Crunchbase Daily:
Vantiv buys WorldPay for $10B
- Britain’s largest payment processor, Worldpay, has agreed to be acquired by U.S. rival Vantiv in a deal valued at $10 billion. Worldpay previously disclosed that it received takeover offers from both Vantiv and JPMorgan. The current deal represents a significant premium over Worldpay’s recent share price.
Baidu buys Kitt.ai
- Acquirers love their AI. China’s Baidu is the last artificial intelligence startup buyer, with its purchase of Kitt.ai, which uses natural language processing technology to power chatbots and voice apps. Seattle-based Kitt previously raised funding from Amazon’s Alexa Fund.
Where the unicorns are
- San Francisco and New York are known for producing the largest numbers of unicorns. But according to a Crunchbase News analysis of 35,000 companies in our database, other metro regions that aren’t known as startup hubs have a pretty impressive success rate relative to their size when it comes to producing well-capitalized companies.