Today's stock market
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Technology stocks led the market, with Apple making history by being the first U.S. company to break through $1 trillion in market capitalization. The Technology Select Sector SPDR ETF (NYSEMKT:XLK) gained 1.3%. The materials sector lagged; the iShares US Basic Materials ETF (NYSEMKT:IYM) fell 1%.
Sonos soars in trading debut
Sonos, maker of high-end speakers for the home audio market, traded publicly for the first time today, and shares soared 32.7% above the initial public offering price of $15. Sonos had lowered the offering price below the $17-$19 target range that was given in the registration statement it filed last week.
Sonos offered 5.6 million shares and current shareholders offered 8.3 million shares in the offering. Options on another 2.1 million shares are available to the underwriters from the company and existing shareholders. After the offering, there are a total of 98.4 million shares outstanding, giving the company a market capitalization of $2 billion. About 86% of the shares outstanding are held by current shareholders under a lock-up period for 180 days. Options for about 50 million additional shares have been issued by the company as part of its incentive plan.
The company has had success selling wireless, multiroom speaker systems known for their audio quality, and has expanded into home theater and voice-activated speakers. Revenue in 2017 was $992.5 million, a 10.1% increase from the year before, but sales appear to be accelerating, with revenue in the first two quarters of the 2018 fiscal year up 18% over the first half last year. The company is not yet profitable, with a loss of $0.25 per share last year, an improvement on a $0.71-per-share loss in 2016.
Sonos is facing some stiff competition in the speaker market from players with deep pockets, such as Apple, Amazon, and Alphabet, as well as from new entrants like Roku. Investors were ready to buy into the company's risky proposition today, though.
Blue Apron tumbles as customer numbers shrink
Shares of meal-kit company Blue Apron got hammered today, plummeting 24.4% after the company failed to meet already-low sales expectations for the second quarter and reported that it's losing customers at a rapid pace. Net revenue fell 25% to $180 million, compared with analyst expectations for a 21% decline. Net loss per share was $0.17, $0.01 less than the analyst consensus. The number of customers decreased 24% from the period a year earlier, and fell 9% from last quarter.
There was a little good news in the quarter, with the average orders per customer holding steady from last quarter at 4.4, and the average order value ticking up from $56.58 in Q1 to $57.34 in Q2. The cost of goods sold improved to 64.7% compared with 68.7% in Q2 last year and 65.8% in Q1 as the company made efficiency improvements. But Blue Apron had reported a sequential increase in customers last quarter, expressing optimism that momentum would continue, and that didn't happen, with the company clearly having trouble attracting new subscribers.
Blue Apron shares had rebounded since last quarter's report, and recently jumped on takeover rumors. But today's news caused the stock to fall to less than a fifth of the IPO price, nearing all-time lows.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Jim Crumly owns shares of GOOG, AMZN, AAPL, and Roku, Inc. The Motley Fool owns shares of and recommends GOOGL, GOOG, AMZN, and AAPL. The Motley Fool has the following options: long January 2020 $150 calls on AAPL and short January 2020 $155 calls on AAPL. The Motley Fool has a disclosure policy.