Topline
Instacart will soon go public via initial public offering, with Nasdaq data indicating its stock will open Tuesday trading at more than $40 per share, keeping the momentum of the IPO market going despite opening at a far less rich valuation than the grocery delivery startup enjoyed during the height of the pandemic.
Key Facts
A $40 share price would be more than 30% above Instacart’s $30 IPO price set Monday.
That would send Instacart’s market capitalization to about $13 billion from its $9.9 billion initial valuation, a far cry from its $39 billion pre-money valuation reached during a March 2021 private funding round.
Instacart, which raised $660 million in its IPO, is the third-largest company to go public in 2023, trailing Kenvue, the Johnson & Johnson spinoff which IPOed in May, and Arm, the British chip designer which went public last week.
Key Background
Founded in 2012 by Brandon Leonardo, Apoorva Mehta and Max Mullen, Instacart exploded in popularity during Covid-19 stay-at-home orders; its pre-money valuation soared from $7.5 billion in November 2018 to $17.5 billion in October 2020 before hitting near $40 billion in 2021, according to Crunchbase data. But internal valuations subsequently dwindled as consumer preferences changed, slipping to $24 billion last spring and $12 billion in April. The company brought in $1.5 billion in revenue and $242 million in net income during the first six months of 2023, according to a regulatory filing.
Surprising Fact
Mehta, Instacart’s largest individual shareholder and its CEO until 2021, will step away from his post as the firm’s chairman as part of the IPO. “A lot of people have said that perhaps I was pushed out of the company,” Mehta told Forbes in an exclusive interview. “The reality is, if I wanted to be the CEO of Instacart, I would be the CEO of Instacart.”
Tangent
Public gig economy companies have slumped since 2021 after hitting all-time high share prices as the U.S. emerged from the worst of the pandemic: DoorDash is down about 70% from its 2021 peak, Uber is down about 25% and Lyft is down more than 80%.
What To Watch For
How Instacart fares on the market after its first day. Other recent large IPOs have dropped considerably from their debut peaks, including Arm, which has seen its shares fall 4% or more over the last three trading sessions. Arm is down more than 20% since its first-day high and is up about 6% from its IPO price. Instacart upped its IPO share price range by nearly 10% last week on the back of Arm’s early success.
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