Blue Apron has just filed for an initial public offering, setting the stage for what could be New York’s largest VC-backed exit. Blue Apron is among the most prominent players in the meal kit and wider food delivery space. It has experienced a huge amount of growth over the last several years, though profitability remains elusive.
We used CB Insights’ Enhanced Valuation capability to track the historical value rise of Blue Apron against another food delivery giant, HelloFresh. We also analyze the both companies’ private market metrics relative to their valuations price-to-sales basis.
Price/sales multiple
As stated above, we chose to compare Blue Apron to HelloFresh due to similarities in terms of business model and product offering; both companies offer subscription-based meal kits which they deliver to their customers.
Because Blue Apron’s earnings show a net loss of $54.8M for 2016, which is the norm for the high-cost low-margin food delivery business model, we did not compare the companies on a price-to-earnings basis, and instead relied on trailing price-to-sales, looking at full-year 2016 revenue.
With a valuation of approximately $2B based on its mid-2015 round of financing, we calculated a 2.51x price-to-sales multiple because this was its last private market valuation as of year-end 2016.
If you take Blue Apron’s Q2’16 to Q1’17 revenue of $868M and use a $2.6B valuation for the price-to-sales ratio, you arrive at a 2.99x multiple.
Both these are cheaper than HelloFresh’s price-to-sales multiple of 3.20x, which is based on the company’s $2.09B valuation. For Blue Apron, 2016 revenue was $795.4M, an impressive 133% year-over-year increase from 2015 $340.8M. The company has significant costs however, including increasing marketing costs and discounting in the face of customer churn. Total operating expenses increased from $387.7M in 2015 to $850.2M in 2016.
Interestingly, Blue Apron reported a profit of approximately $3M for Q1’16, though there was a loss of $52.2M in Q1’17.
Quarterly valuation history
Below, we compare the private market valuation histories of Blue Apron and HelloFresh on a quarterly basis.
Blue Apron jumped in value from $32M to $500M in Q2’14, after a $50M Series C round of funding from high-profile investors including Bessemer Venture Partners and First Round Capital. In Q2’15, after a $135M Series D round of funding from Fidelity Investments and Bessemer Venture Partners, among others, Blue Apron’s value shot to $2B.
However, it should be noted that this latest round of funding actually represented a downround in which the startup’s price per share dropped from $16.66 to $13.33. Often a company’s aggregate valuation can still rise amidst a drop in share price due to an infusion of cash from the round and other factors.
Blue Apron’s current valuation is at $2.6B (as noted by the dashed line in the chart above), due to a the latest stock options issued at a price approximately 20% higher than the price-per-share of $13.33, which was determined during the company’s last private round of funding. This would bring Blue Apron’s valuation above that of HelloFresh for the first time since 2015.
Comparatively, HelloFresh’s valuation history has taken a different path. The startup’s value increased dramatically from $680M to $2.9B after an $84.7M Series F round of funding in Q3’15. However in Q4’16, the company’s value declined to $2.09B after the company received $88.5M as part of a Series G downround.
HelloFresh’s recent downround is a reminder that the food delivery space has continued to struggle with unit economics, as well as a number of high-profile shutdowns, including Maple and Sprig most recently. If Blue Apron is to continue successfully beyond its IPO, it will have to convince the public markets that it can achieve future growth in a manner which is sustainable.
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