Instacart Prices IPO at $30 a Share, Raising $660 Million

Instacart, the San Francisco-based grocery delivery company, has priced its shares at $30 each for its initial public offering (IPO), at the top of its expected range. This indicates renewed demand for tech stocks and suggests a potentially positive sign for upcoming tech public offerings. The company raised $660 million in the offering and was valued at $9.9 billion. Although this is significantly below its last private fundraising round in 2021, which valued the company at $39 billion.

Instacart’s shares will begin trading on the Nasdaq stock exchange under the ticker symbol CART. The company’s IPO highlights one of the largest gaps between a company’s private and public market valuations, serving as a reality check for other highly valued start-ups. Many companies that raised money during the boom times of 2020 and 2021 have recently faced reducing valuations.

Despite the challenging environment, Instacart’s successful IPO could provide hope to other companies seeking to tap into the public markets. It’s worth noting that this year has been the worst year for IPOs since 2009, according to EquityZen, a marketplace for private stocks.

Instacart’s path to going public, along with that of Klaviyo, a marketing tech company also listing shares this week, has been closely followed by Silicon Valley and Wall Street. A positive reception could encourage more companies to raise money through public offerings.

In 2012, Instacart was founded as one of many gig economy start-ups that rely on contract workers to deliver on-demand services. By diversifying into more profitable businesses such as advertising and software tools, Instacart managed to turn a profit. In 2020, the company generated $2.5 billion in revenue, a 39 percent increase from the previous year, with $428 million in net profit.

However, the pandemic had a significant impact on Instacart’s growth, leading to slower expansion in 2021. Despite a surge in orders during the initial lockdowns, the company’s grocery orders only grew by 18 percent in comparison to 2021. Additionally, orders in the first half of this year remained flat compared to the same period last year.

To instill confidence in its IPO, Instacart secured a $175 million investment in its IPO shares from PepsiCo before the listing. Other firms, including Sequoia Capital and D1 Capital, expressed interest in purchasing $400 million worth of Instacart’s IPO shares. This move helped attract Wall Street investors back to the market after struggling performances from young tech companies in recent years.

The co-founder of Instacart, Apoorva Mehta, who stepped down as CEO in 2021, owns an 11 percent stake. At $30 a share, his holdings are worth $869 million.

In addition, Meredith Kopit Levien, the CEO of The New York Times, sits on Instacart’s board.

Source: Instacart Prices I.P.O. at $30 a Share, Raising $660 Million