Meal-kit company Blue Apron tumbled after The Sunday Times reported that Amazon is getting ready to launch its own meal-prep business. The British newspaper reported that Amazon registered a trademark for a food kit business.
Blue Apron Holdings (APRN) filed to go public about two weeks before Amazon agreed to buy the Whole Foods grocery chain. The company went public June 29 with an IPO that priced at $10 a share, less than the company initially expected, and its stock has fallen further since then.
On Monday it dropped 84 cents, or 11.4 percent, to $6.52 while Amazon added $8.68 to $1,010.49.
Blue Apron, which raised about $300 million in the IPO, ships boxes to customers filled with all the raw ingredients needed to make home-cooked meals. The New York company has many rivals, including HelloFresh and Plated.
Amazon (AMZN), which is buying Whole Foods Market (WFM) for $13.7 billion, is getting into the food delivery business with its Amazon Fresh line. In some cities, Amazon already sells meal kits with recipes created by home goods mogul Martha Stewart.
Like many other internet startups, Blue Apron also has a history of financial losses, and it is unclear whether it can continue adding enough customers to drive growth.
CEO Matthew Salzberg dismissed concerns about competition. He said in a TV interview the week of his company's IPO that more competition will only help convince people to skip the supermarket and buy their groceries online.
"In some ways, Amazon is an ally for us in this fight," Salzberg told business news channel CNBC.
Salzberg, 33, co-founded Blue Apron five years ago. The company has never made a profit, and it reported a loss of $55 million last year, but its sales have soared. It posted revenue of $795.4 million for 2016, more than double its level the year before. It spent nearly 70 percent of last year's revenue on food, shipping and other expenses related to running the company, according to government filings.
Blue Apron's cheapest kit, which makes four servings, costs about $48. Each box comes with pre-portioned raw meat, seafood and vegetables, as well as seasonings. There are also recipe cards to help customers cook up meals such as basil fettuccine or quinoa burgers. Blue Apron said it had more than 1 million customers at the end of March.