Instacart Prices IPO at $30 a Share, Valuing the Company at $10 Billion
Instacart, the popular grocery-delivery company, has priced its long-awaited initial public offering (IPO) at $30 per share. This makes it the first significant venture-backed tech company to go public in the United States since December 2021.
The IPO was on the higher end of the expected range of $28 to $30 per share, and it values Instacart at approximately $10 billion. The offering consisted of 22 million shares, with 14.1 million sold by the company and 7.9 million sold by existing shareholders. The stock will begin trading on the Nasdaq Stock Market under the ticker symbol “CART.”
Instacart’s Journey and Competition
Instacart, which partners with grocery chains like Kroger, Costco, and Wegmans, had to significantly reduce its stock price to attract public market investors. In early 2021, during the peak of the Covid pandemic, Instacart raised funds at a valuation of $39 billion, or $125 per share, from prominent venture firms and asset managers. However, the tech IPO market has been stagnant since December 2021 due to inflationary pressures and rising interest rates.
Instacart has focused on profitability rather than growth, proving that its business model can generate earnings. While revenue growth slowed to 15% in the second quarter of 2022 compared to previous years, the company reduced costs and reported $114 million in net income. Its valuation of $10 billion represents a multiple of 3.5 times its annual revenue.
Despite competition from companies like DoorDash and Uber’s Uber Eats, Instacart faces the most significant competition from Amazon and large brick-and-mortar retailers like Target and Walmart, which also offer delivery services.
Investors and Shareholders
Sequoia Capital holds the largest stake in Instacart, owning 15% of the company. The venture firm has seen substantial paper profits on its investment but has also experienced a decrease in the value of shares it purchased in 2021.
Instacart co-founder Apoorva Mehta, who owns shares worth over $800 million, will sell a portion of his holdings in the IPO. Mehta stepped down as CEO in 2021 and will resign from the board, with ex-Facebook executive Fidji Simo taking over as CEO and chair.
Goldman Sachs and JPMorgan Chase are leading the IPO deal, which only floated about 8% of Instacart’s outstanding shares. Existing shareholders, including co-founders and former employees, are also selling their shares in the offering.