Tue. Sep 26th, 2023
    Instacart Sets IPO Price at $30 per Share, Valuing Company at $10 Billion

    Instacart, the grocery-delivery company, announced on Monday that it has priced its initial public offering (IPO) at $30 per share. This falls at the top end of the expected range of $28 to $30 per share. With this pricing, Instacart will become the first notable venture-backed tech IPO in the U.S. since December 2021. The company will be listed on the Nasdaq Stock Market under the ticker symbol “CART.”

    However, Instacart has taken a significant valuation haircut, as the company’s worth has declined from a peak of $39 billion in 2021 to the current valuation of $10 billion. This drop in valuation can be attributed to the shift in investor sentiment towards less risk in the market.

    Instacart, founded 11 years ago, has gained popularity during the pandemic by delivering groceries from major chains such as Kroger, Costco, and Wegmans. In order to make its IPO more attractive to public investors, the company had to dramatically reduce its stock price. Earlier this year, Instacart raised funds at a valuation of $39 billion, but has now priced its IPO much lower to generate interest in the public market.

    The tech IPO market has been sluggish due to inflationary pressures and rising interest rates, which have led to a decrease in the prices of internet and software stocks. Therefore, the performance of Instacart’s IPO, along with other upcoming tech IPOs like Klaviyo, will be crucial in determining the appetite for billion-dollar-plus companies in the market.

    Instacart has shifted its focus from growth to profitability and has been able to generate earnings. Although revenue growth has slowed down, with a 15% increase in the second quarter of 2022 compared to 40% growth in the same period last year, the company has managed to reduce costs and increase its net income.

    Despite competition from the likes of Amazon, Target, and Walmart, Instacart remains a significant player in the grocery delivery space. The company’s largest investor is Sequoia with a fully diluted stake of 15%.

    Goldman Sachs and JPMorgan Chase are leading the IPO deal for Instacart, which will float only about 8% of its outstanding shares in the offering.

    – [Source 1]
    – [Source 2]