Instacart spent its first day as a public company in volatile fashion.
After the IPO was priced at $30, the stock opened 40% higher and peaked at $42.95 before losing steam. Shares closed at $33.70, giving the company a first-day pop of 12.3%.
The delivery firm now carries a market value of $11.2 billion.
The San-Francisco based company said late Monday that it sold 22 million shares in the IPO, raising a total of $660 million, roughly $420 million of which goes to the company.
Instacart is one of the year’s most hotly watched IPOs, following the listing of chip designer Arm Holdings (ticker: ARM) last week. Taken together, they are expected to crack open the window for the IPO market, which has been quiet for most of the year. Klaviyo, a marketing software company, is expected to start trading on Wednesday.
How
Instacart
trades beyond Tuesday will depend on investors’ faith in the future of the gig economy’s expansion and profitability. Maplebear, as Instacart is formally known, generated $2.55 billion in revenue last year, up 39% from a year earlier. Roughly three-quarters of that revenue came from the company’s core business of delivering groceries to homes with the help of contractors. The rest was generated from other services and a new offering called Instacart Ads, where retailers pay to show ads to customers.
Instacart had net losses of $70 million and $73 million in 2020 and 2021, respectively. It generated net income of $428 million in 2022, though much of that came from a $358 million tax benefit.
At the $42 opening price, Instacart was valued at about six times its annual sales.
DoorDash
(DASH), named as a competitor in Instacart’s filings, has a cheaper price-to-sales ratio of 4.1 times. DoorDash has consistently increased annual sales after going public in 2020, but the company has yet to turn a per-share profit.
Instacart also lists UberEats, part of
Uber Technologies
(UBER), and Shipt, owned by Target, as competitors.
Instacart, which was founded in 2012, officially filed to go public on Aug. 25 after a long wait—the company had first filed a confidential registration statement for a potential IPO in May 2022. As a private company, Instacart had been valued as high as $39 billion.
Write to Karishma Vanjani at [email protected]
Read the full article here