Sorry Blue Apron, you just got “Amazoned.”
Just two weeks ago, the meal prep delivery startup looked like it would coast through its IPO roadshow and start public trading with a juicy valuation around $US3 billion. Then deal-happy retail juggernaut Amazon shelled out $US13.7 billion to buy Whole Foods.
It was terrible timing for Blue Apron. Many potential investors quickly identified the possibility of more competition in the food delivery industry and ran the other way.
As a result, Blue Apron took a cleaver to its IPO range, cutting it to $US10 to $US11 per share, down from $US15 to $US17. The company ultimately priced at $US10 per share late on Wednesday — a full 40% below the maximum it had sought. And, at $US1.9 billion, the company’s market cap at the IPO price is less than the $US2 billion valuation it earned in its last round of private fundraising.
But this is just the latest example of Amazon imposing its will on an industry, and erasing billions of dollars of competitors’ market value in the process. Armed with a war chest of cash and growing at an astronomical pace, the Jeff Bezos-led tech titan is clearly not afraid to throw its weight around.
Just ask Kroger, Costco and Target, who, prior to the Blue Apron debacle, were the last set of companies to get Amazoned.
Their reckoning came after the the Whole Foods acquisition, as investors interpreted Amazon’s likely focus on e-commerce and grocery delivery as bad news for traditional brick-and-mortar retailers. A group of grocers under the Business Insider-coined acronym WDSTCK — Walmart, Dollar General, SuperValu, Target, Costco and Kroger — lost $US24 billion in market value in just one week following the deal announcement.
Even peripherally-related industries got Amazoned to an extent after the Whole Foods deal. A group of pharmacy stocks known as CWACME — CVS, Walgreens, AmerisourceBergen, Cardinal, McKesson and Express Scripts — dropped on news of the acquisition, losing roughly $US7 billion in a week.
However, Amazon’s influence can be a double-edged sword. Sneaker giant Nike soared 2% on June 21 after it was announced that Amazon would begin selling its products directly. Nike is up 3.5% since.
Investor attention will now turn to Amazon’s next endeavour. The pivot into grocery retail surprised many people, and shows more than ever that no industry is off-limits.
As of right now, one thing is certain: it’s Amazon’s world, and everyone else is just living in it.