A giant wall of lettuce, crates of vegetables, and gourmet food stands adorned the front of the New York Stock Exchange building on Thursday morning as meal delivery service Blue Apron celebrated its debut on the trading floor.

Produce-related festivities aside, enthusiasm for the once hotly anticipated public offering has wilted in the past couple days as the company lowered its target opening stock price from between $15 and $17 to just $10. 

A stale day of trading that left shares stagnant at a time when young companies usually look for fresh momentum didn’t do much to lift the mood among investors.

What’s to blame for this sudden change of spirits? The prime suspect is the monster marriage of Amazon and Whole Foods, the shockwaves of which have been felt by nearly every retailer that’s ever touched an organic carrot.   

 “Amazon/Whole Foods is the elephant in the room,” said Goodwater Capital managing partner Eric Kim. “Blue Apron will be under intense scrutiny as to how they intend to create a sustainable moat around their business.”  

Blue Apron’s troubles don’t stop and start with Amazon, of course. But the emergence of a new threat to the company’s business model may have thrown into sharper relief some of the other potential red flags lurking in its financials. 

Founded in 2012, Blue Apron set itself apart from the rest of the subscription delivery boom with a business plan based around home cooking. Customers sign up to receive weekly bundles of meal kits stocked with pre-apportioned ingredients for a price that comes out to around $10 per serving.

It made a name for itself with heavy marketing spend — fans of most major podcasts have probably heard a host sing its praises more than once.

By the standards of money-burning tech startups, the company has done pretty well for itself, according to balance sheets revealed in its IPO filing. Revenue has grown explosively — nearly tenfold in the last two years alone — and it even managed to turn a profit one quarter.

Elsewhere though, there were enough disconcerting signs to give some analysts pause. Stagnating customer growth and widening losses suggest that the marketing spend needed to bring in each new sign-up is on the rise (there are only so many podcast listeners in the world).

And the customers they do have aren’t choosing to eat more. The average order value per customer hasn’t grown in two years, and it’s actually starting to decline.

A Goodwater Capital survey of more than 2,600 consumers found that current Blue Apron subscribers planned to increase and decrease their usage of the service in about equal number — 42 percent and 44 percent each. Those numbers stacked up less favorably than every conceivable competitor on which the firm also polled respondents.

“Blue Apron’s growth and success depend heavily on customer and order growth,” Kim said. “High customer churn … might require high levels of marketing and incentive or promotion expenses to offset this churn.”

Meanwhile, Amazon was the clear favorite among consumers who took the survey. A whopping nine out of 10 said they planned to shop there more, while less than 7 percent said the opposite. On its heels was its own AmazonFresh grocery delivery service with a split of 64 percent intending to up usage to 22 percent planning a decrease.  

To be clear, even Amazon’s grocery arm doesn’t currently offer a full-scale service on par with Blue Apron’s DIY meal model — though similar kits from third parties like Tyson Tastemakers are available in some AmazonFresh markets. But it wouldn’t be much of a stretch once the company has access to hundreds of Whole Foods locations, which could also serve as distribution centers. 

The other question is how much of a premium shoppers are ultimately willing to pay for the convenience of having their groceries meted out into recipe-specific baggies and their weekly meals planned. Blue Apron’s success suggests that premium is substantial — a study from NDP Group last week found that meal kits cost on average more than twice the price of shopping for yourself and around the same as eating out.

But at a certain set of price points, one would assume that the work of sorting and chopping your own onions becomes worth the trouble, especially if your grocery list is already shipped to your door anyway. 

Will the new customers Blue Apron needs to appease Wall Street fork up for the same premium? As the company shifts its marketing spend from podcasts to global TV commercials, it will probably need to make the case to a wider audience beyond its metropolitan-millennial-heavy base. And if the last few months are any indication, it will likely rack up heavy losses doing so.

Losing money is par for the course for fast-growing tech companies, but Blue Apron’s lackluster IPO may suggest that Wall Street is losing patience with Silicon Valley’s high-rolling margins. 

The company was originally hoping its stock exchange debut could vault it to a valuation of $3 billion from the $2 billion it claimed in its most recent private funding round. Instead, it slashed that expectation entirely on the eve of the offering, making it one of only 4 percent of internet companies to have downgraded forecasts ahead of an IPO this decade, according to CNBC.  

The stock then proceeded to hover at the lower end of those lowered expectations on its first trading day; it opened at $10 and closed at the same price before drifting slightly lower in after-hours trading.

Amazon, on the other hand, doesn’t have anywhere near that pressure. Its vast retail empire can fund whatever losses it might need to take, and the online shopping giant has shown for years that it’s okay with sinking its profits into expanding its business tentacles.

That’s one of the perennial challenges for any company battling Amazon, and Blue Apron’s not the only one doing so in the meal kit space. Dozens of venture-backed startups like Hello Fresh — which is said to be eyeing an imminent IPO in Germany — and Chef’d are also vying for this particular market, but their numbers are thinning. Slice Intelligence analyst Ken Cassar expects that about half of these companies will die off sooner rather than later.  

But these companies are ultimately small fish in a sea where Amazon’s the shark.

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