After a year of IPO doldrums,things are starting to heat up. Last week, we covered the pending IPO of Arm Holdings, the semiconductor design company. This week, the popular grocery delivery service, Instacart (Nasdaq: CART) announced it will be listing soon.
According to a report from CNBC, Instacart is seeking a valuation of $9.3 billion dollars, with shares to be priced somewhere between $26 to $28. At the higher price, the company could net roughly $616 million in proceeds. The valuation of $9.3 billion falls far short from the $39 billion valuation from a March 2021 funding round
Instacart is an American online grocery delivery and pickup service that allows customers to order groceries and other household items from their favorite local stores and have them delivered to their doorstep or prepared for pickup.
The company was founded in 2012 by Apoorva Mehta, Max Mullen, and Brandon Leonardo and has since become one of the leading players in the rapidly growing online grocery shopping and delivery industry.
Instacart is an American online grocery delivery and pickup service that allows customers to order groceries and other household items from their favorite local stores and have them delivered to their doorstep or prepared for pickup. The company was founded in 2012 by Apoorva Mehta, Max Mullen, and Brandon Leonardo and has since become one of the leading players in the rapidly growing online grocery shopping and delivery industry.
Here are some key points about Instacart:
1. Business Model: Instacart operates as an intermediary between customers and various retail partners, including grocery stores, supermarkets, and wholesale clubs. Customers can use the Instacart app or website to browse products, create shopping lists, and place orders. Instacart shoppers, also known as “personal shoppers,” then fulfill these orders by picking items from the stores and delivering them to the customers’ chosen delivery location.
2. Service Options: Instacart offers several service options, including same-day delivery, next-day delivery, and even one-hour delivery for some locations. Customers can also choose to schedule their deliveries in advance.
3. Retail Partnerships: Instacart partners with a wide range of retailers, including major grocery chains like Kroger, Safeway, and Costco, as well as specialty stores and local independent businesses. This partnership model allows customers to access a broad selection of products from various stores in one order.
4. Membership Programs: Instacart offers a membership program called Instacart Express, which provides members with benefits such as free delivery on orders over a certain amount, reduced service fees, and exclusive discounts. This program is designed to incentivize recurring usage of the platform.
5. Gig Economy Workforce: Instacart relies on a network of independent contractors, or gig workers, who serve as personal shoppers and drivers. These individuals use their own vehicles to pick and deliver groceries to customers. They can choose when and where they want to work, providing flexibility in their schedules.
6. Geographic Availability: Instacart is available in thousands of cities across the United States and Canada. The availability of specific stores and delivery options may vary by location.
7. Funding and Growth: Instacart has experienced significant growth over the years and has raised substantial funding through multiple rounds of investment. The company has expanded its services to include not only groceries but also other items like household goods, personal care products, and even alcohol in some markets.
8. Competition: Instacart faces competition from other online grocery delivery services, including Amazon Fresh, Walmart Grocery, and various regional and local players.
Instacart has gained popularity, especially in recent years, due to the convenience it offers, particularly during the COVID-19 pandemic when many people turned to online grocery shopping to minimize in-person interactions. Its success underscores the growing trend toward e-commerce in the grocery industry and the increasing demand for convenient home delivery and pickup options for everyday essentials.
According to an article in New York Magazine, Instacart appears to be an attractive target for investors.
“This would be apparent to anyone on Wall Street. Still, $9 billion is a lot of money, and with 7.7 million or so people still using the app, there’s money to be made off the grocery-delivery business. (Increasingly, that means advertising — the company now makes about 30 percent of its money from selling ad space on its app.) These IPO prices reflect what investors are willing to pay for company shares during road shows, when Instacart’s bankers — in this case, Goldman Sachs — make the bull case directly to professional investors.”
The recent surge of IPOs suggests that Wall Street is putting a potential recession in the rear view mirror, and they are ready to start investing more aggressively.
Stay tuned as we monitor the Instacart IPO once it launches.