NEW YORK – Blue Apron (APRN), a meal-prep company whose first ingredient kit included a Cornish hen, is hoping not to lay an egg after making its stock market debut.
After rising in earlier trading on Thursday during the company's initial public offering, Blue Apron shares gave up the gains to close at $10. That was at the bottom end of the company's price range for the stock, suggesting that investors are wary of betting on a loss-making internet startup in the fiercely competitive retail food niche.
Blue Apron raised $300 million in the IPO, below what it originally wanted to raise. The average first-day return for the 79 companies that have gone public this year is just over 8 percent, according to IPO research firm Renaissance Capital.
The New York company ships boxes to customers filled with all the raw ingredients needed to make home-cooked meals. Blue Apron has many rivals, including HelloFresh and Plated.
Blue Apronto between $10 and $11, from $15 to $17, just before its market debut, a sign of weaker-than-expected investor demand.
The stock is trading on the New York Stock Exchange under the symbol "APRN."
That caution may be warranted. 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. That has raised concerns that Blue Apron is vulnerable to deep-pocketed rivals. Other competitors include HelloFresh and Plated.
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 Thursday 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.