Instacart makes long-awaited public market debut

Dive Brief:

Instacart made its debut on the Nasdaq on Tuesday under the ticker symbol “CART.”
Instacart on Monday priced its initial public offering of stock at $30 per share, raising $660 million.
The announcement marks both Instacart’s long-awaited public market debut and a new financial chapter for the company that will invite closer scrutiny of its business.

Dive Insight:

Instacart disclosed last week that it planned to offer 22 million shares within an estimated price range of $26 to $28 per share, which would put its valuation on a fully diluted basis between $8.6 billion and $9.3 billion. On Friday, Instacart lifted its target IPO share price range to between $28 and $30 each, following the successful public market debut of SoftBank’s Arm Holdings.

Instacart’s share price of $30 puts the company’s valuation at $9.9 billion on a fully diluted basis — a far cry from the nearly $40 billion valuation it posted in early 2021 at the height of the COVID-19 pandemic.

Timeline of Instacart’s valuation

June 2020

Instacart raises $225 million in new funding, bringing its total valuation to $13.7 billion.
October 2020

Instacart bags another $200 million, bringing its valuation up to $17.7 billion.
March 2021

A $265 million funding round more than doubles the company’s valuation to $39 billion.
March 2022

The company slashes its valuation by nearly 40%, to around $24 billion.
July 2022

Instacart cuts its valuation again, to $15 billion, according to Barron’s.
October 2022

Instacart cuts its valuation for a third time in 2022, to $13 billion, The Information and Bloomberg reported.
September 2023

On a fully diluted basis, Instacart projects its valuation will fall between $8.6 billion and $9.3 billion when it goes public.
September 2023

Less than a week later, Instacart raises its valuation projections to between $9.3 billion and $9.9 billion on a fully diluted basis.

Instacart’s IPO journey stretches back several years with moves seemingly aimed at helping the company go public and includes significant growth in grocery delivery followed by an extension into other services like smart carts and digital advertising.

In January 2021, Instacart tapped Nick Giovanni, a Goldman Sachs IPO specialist who helped tech companies such as Twitter and eBay go public, as its CFO. A few months later, Instacart named Frank Slootman, an IPO veteran, technology entrepreneur and chairman and CEO of enterprise software specialist Snowflake, to its board of directors. Over the last two decades, Slootman led Snowflake, data backup company Data Domain and cloud computing company ServiceNow onto the stock market.

In its prospectus filed with the U.S. Securities and Exchange Commission, Instacart said it sees a runway for grocery e-commerce to continue growing, citing data from Incisiv that it said shows the online grocery market will post a compound annual growth rate of 10% to 18% between 2022 and 2025, compared with 0% to 4% for offline sales.

Instacart recently began generating profit and had a net income of $242 million during the first half of 2023, compared with a $74 million loss during the same period in 2022, per its prospectus. While Instacart said in that filing it serves more than 1,400 banners, it disclosed it is heavily dependent on just a handful of retailers with its top three retailers accounting for about 43% of Instacart’s gross transaction value in 2021, 2022 and the first half of 2023.

Instacart is positioning itself as not just a delivery partner with an army of gig workers, but also as a technology solutions provider for in-store and online, and a growing retail media platform. The company’s expanded revenue streams have created a delicate balancing act for a company that is still primarily serving as a middleman between retailers, CPGs and consumers.