Meal kit makers Blue Apron may be preparing to file for a 2017 IPO, according to Reuters. The report says that the food startup has hired bankers from Goldman Sachs, Morgan Stanley and Citigroup to this end.
The whole thing has stirred up quite the conversation over here at TechCrunch, and we’ve been arguing amongst ourselves about the likelihood that the Blue Apron IPO happens soon, or at all. For what it’s worth, we have sources saying there is no IPO effort under way for Blue Apron yet, and Reuters’ source may have had his or her own agenda.
There are three obvious possibilities here:
- Blue Apron is actually exploring the idea of an IPO. It’s in the early stages, but the company is exploring it nonetheless.
- Blue Apron and/or its bankers are floating the rumor of an IPO to attract potential acquirers.
- Blue Apron neither has imminent IPO plans, nor is it interested in an acquisition.
Any of the above would make for a fairly standard business tactic and story. But here’s the thing: Blue Apron is at the point where it could just sit tight.
The company is facing lots of competition, but it’s an early mover with great brand recognition. The range of M&A suitors one can imagine is broad and varied. While Blue Apron is not reported to be profitable — yet — it’s been investing in marketing and expanding its operations, making quite a land grab.
We asked Blue Apron to confirm or correct the Reuters report earlier today and didn’t receive a response.
Let’s say…
Blue Apron is prepping for an IPO
If this scenario turns out to be true, it wouldn’t be the first time in recent history that an unprofitable company went public with candid warnings that business investment outweighed profits. Snap said in its own IPO prospectus that it may never achieve profitability, operating at a net loss of $514.6 million in 2016.
Remember, profitability isn’t the white whale it once was. Just look at Amazon.
It’s also worth noting that the preparatory stages of an IPO can last a couple of years, if not longer, and that Blue Apron could be merely dipping its toes in the water to see if it’s warm.
A company might go public before stabilizing margins and achieving steady profitability for several reasons. The first is that there is a valid growth strategy in place, and a story that the public market can believe in; meanwhile, the company doesn’t have to carve out more equity for private investors.
There’s also the possibility that investors — who’ve now provided Blue Apron with nearly $200 million…