Instacart’s IPO surges as the grocery delivery company goes from the supermarket to the stock market
Instacart delivered in its stock market debut.
The grocery delivery company’s shares __ priced at $30 per share ahead of the IPO __ hit a peak of $42.95 Tuesday in the first few minutes of trading on the Nasdaq stock exchange. They finished the day up 12.3% at $33.70, giving the company a market value of more than $11 billion.
At Instacart’s San Francisco headquarters, CEO Fidji Simo and other executives celebrated the IPO by ringing a bell shaped like the company’s carrot logo. Around 1,000 employees attended, the company said. Instacart’s shares are trading under the ticker symbol “CART.”
The IPO is a long-awaited step for Instacart, which was founded in 2012. The company filed privately for an IPO in May 2022 but delayed those plans last fall when the markets were roiling due to recession fears. There were just 71 IPOs in the U.S. last year, the lowest number since 2009, according to Renaissance Capital.
But a resurgent market is seeing more IPO activity this year. Last week, shares of U.K. chip maker Arm Holdings rose almost 25% in their stock market debut on the Nasdaq, the largest IPO in nearly two years.
Joe Endoso, President at Linqto, an investment platform, said a successful listing by Instacart could prod others __ especially tech companies __ to consider IPOs in the coming months.
“The global financial markets are buzzing with optimism for a potential resurgence in the IPO market,” he said.
Instacart raised $660 million in its initial public offering, selling 22 million shares at $30 apiece. The pricing of the IPO gave Instacart a market value of around $10 billion, significantly lower than the $39 billion value placed on it after a fund-raising round in 2021.
Instacart provides delivery and pickup from 85% of U.S. grocers, or more than 80,000 stores, using a network of 600,000 freelance shoppers.
It also provides in-store technology, like smart carts and electronic shelf tags, and sells online ads to food companies and retailers.
It says it has 7.7 million active customers who spend about $317 per month on the platform.
In a letter to investors earlier this month, said grocery delivery has tremendous potential. The U.S. grocery market is a $1.1. trillion industry, but only 12% of sales are made online. She said she expects that to at least double over time.
“We have demonstrated our ability to help our retail partners drive strong growth and stay competitive in a complex and increasingly digital industry,” wrote Simo, a former Facebook executive who became Instacart’s CEO in 2021. Simo grew up in France and is the daughter and granddaughter of fishermen.
The grocery delivery market boomed early in the pandemic. Growth has stabilized, but the market is still about four times larger than it was in 2019, said David Bishop, a partner and lead researcher with Brick Meets Click, a consulting firm that specializes in online grocery shopping.
That market is also increasingly competitive. Instacart faces growing pressure from companies including Uber Eats and DoorDash, which both began delivering groceries in 2020.
As of August, Instacart controlled 70% of the third-party U.S. grocery delivery market, according to YipitData, a market research firm. DoorDash controls around 10%. This week, DoorDash added more U.S. grocers to its offerings, including Cub, Lowe’s Markets and Eataly.
