HelloFresh shares rose as much as 4 percent on their first day of public trading, valuing the Berlin-based meal-kit delivery firm at more than double Blue Apron, the U.S rival from which it is rapidly seizing market share.
Majority-owned by German e-commerce group Rocket Internet , HelloFresh shares traded at 10.47 euros at 1525 GMT on Thursday, 2.2 percent above the 10.25 euro issue price announced by the company late on Wednesday.
By contrast,shares in Blue Apron tumbled to new lows after the company reported on Thursday a modest rise in third-quarter sales, but warned that losses for the second half of 2017 would widen around 7 to 8 percent beyond its previous targets. The stock was off 7.5 percent to $4.32 on Nasdaq.
Blue Apron has suffered a 50 percent drop since its own IPO in late June. It was hit hard in July after Amazon.com registered a trademark for a possible rival service. Last month, New York-based firm cut 6 percent of its workforce.
HelloFresh sold 31 million new shares, giving it a valuation around 1.7 billion euros at current prices – more than double the $888 million (763 million euro) market capitalisation of Blue Apron.
The listing represents a partial vindication for the HelloFresh after it cancelled a planned 2015 IPO when investors rejected a valuation above 2 billion euros at that time.
However, HelloFresh faces mounting competition from deep-pocketed rivals such as Amazon.com as it moves to increase food delivery services after acquiring the Whole Earth Foods grocery chain in August. U.S. supermarket chain Albertsons acquired meal-kit rival Plated in September.
Both firms must spend heavily on marketing to win consumers to the concept of delivering pre-packaged ingredients to make home cooking more accessible. Marketing costs represent more than one-quarter of HelloFresh expenses, financial filings show.
HelloFresh remains loss-making but has narrowed its losses and pledged to break even on an operating profit level within 15 months.
HelloFresh, founded six years ago, has enjoyed rocketing growth in the United States, which is by far its largest market, accounting for 60 percent of revenue in the first half of 2017.
Its U.S. sales doubled to 263.4 million euros during the first six months of this year, while non-U.S. sales rose a subdued 8 percent to 172 million euros, according to its IPO prospectus. International operations range from Germany to Britain, the Netherlands, Canada and Australia.
Its surging U.S. growth appears to be coming at least partly at the expense of Blue Apron, which held twice the market share of HelloFresh in 2015 and even as recently 2016, according to data from online audience measurement firm SimilarWeb.
Blue Apron’s split of online traffic in the U.S. market has dropped to 56 percent while HelloFresh has steadily risen to where it had 44 percent in September, SimilarWeb data showed.
Take your pick!
- Buyouts delivers exclusive news and analysis about private equity deals, fundraising, top-quartile managers and more. Get your FREE trial or subscribe now.
- VC Journal provides exclusive news and analysis about venture capital deals, fundraising, top-quartile investors and more. Get your FREE trial or subscribe now.