Weekly Financial Recap June 3

Some highlights of this past week’s news in business

blue-apron-ipo-walk
Blue Apron provides meal kits to customers on a subscription basis

U.S. Markets

  • The Dow Jones Industrial Average continued its weekly gains with an increase of
    +149.74 or +0.71% to a close of 21,195.23. Equities continued to climb towards record highs, shrugging off the less than expected jobs report. Gains in technology, healthcare, and consumer services led shares higher while decreases in financial services prevented further record highs. The greatest gains for the week were Microsoft (NASDAQ: MSFT) which gained 2.81% or $1.96 to trade at $71.76. Likewise, McDonald’s (NYSE: MCD) gained 2.41% or $3.61 for the week to trade at $153.59 and Boeing (NYSE: BA) gained 1.83% or $3.41 to close at $190.17. Meanwhile, the largest falls for the week were Goldman Sachs (NSYE: GS) which fell 3.88% or $8.61 to close at $213.39 and J.P. Morgan (NYSE: JPM) which fell by 3.03% or $2.58 to close at $82.54 for the week. 

U.S. Employment 

  • The number of Americans who filed for unemployment benefits surpassed expectations for the week ending May 27. Total weekly jobless claims rose to 248,000 compared to the 239,000 claims that were expected. Meanwhile, the four-week moving average was slightly bumped up to 238,000, an increase of 2,500. This week signaled the 117th week that claims were below 300,000, a benchmark associated with a healthy labor force. 
  • The May jobs report demonstrated that consistent hiring has pushed the unemployment rate to its lowest threshold since May 2001, adding 138,000 jobs for the month. Unemployment fell to 4.3%, putting the economy towards or marginally close to its full level of employment. These numbers signal to investors that the Fed will most likely stay on track to increase rates as early as this month. 

IPOs

  • The meal-delivery service, Blue Apron, has filed to go public with the SEC. However, unlike most other hot tech companies, Blue Apron has actually reported profits of $3.0M in Q1 of 2016 but unfortunately reported ($52.2M) in losses during Q1 2017. Like most tech companies, Blue Apron has amassed huge amounts of annual losses since its inception in 2012 until 2016. Yet the recent profits in the last year signal the company’s ability to control its costs and develop their overall business strategy before diving right into growth mode. 
    • The company was valued at $2 Billion in 2015 and plans to list on the New York Stock Exchange under the ticker symbol: “APRN”. In September of 2015, the company launched a wine-pairing service to deliver wine along with meals. It also operates an e-commerce site for cooking tools. The company surpassed the benchmark of 1 million customers during Q1 2017 and recorded revenue of nearly $800 Million in 2016. 
    • There’s competition. The company has been competing with mostly other private companies including meal-kit startups Plated, Munchery, and the behemoth of Amazon (NASDAQ: AMZN) and its grocery offerings. With the additional capital raised from the IPO, Blue Apron looks to acquire additional market share from its competitors. 
    • It isn’t all rainbows and sunshine. The company has a history of customer retention difficulties. The first quarter of the year tends to be the strongest performing months for Blue Apron whereas the summer months tend to be typically slower as more families and individuals take off for vacations and rely less on preparing their own meals. However, in the company’s prospectus, it stated that 92% of net revenue during 2016 came from repeat orders, ranging from 89% to 93% across each of the four quarters. The company makes a distinction between orders and repeat orders and emphasizes that repeat orders don’t necessarily demonstrate the dollar value of each order and encourages investors to take both metrics and net revenue under consideration. 

 

Ali Punjani
Independent Business Blogger 

Share Prices are listed with their respective Friday close values. Economic data is provided on a weekly change basis unless otherwise stated. 

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