The Instacart IPO is expected to make its appearance by late 2022. According to the online delivery company, millions signed up for its services during the pandemic.
After evading rumors for a long time, in May 2022, the company announced that it had submitted a draft registration statement to the US Securities and Exchange Commission (SEC). As the company has slashed the Instacart valuation, investors might be able to buy shares at a lower price and see gains later if usage grows, when the economy picks up.
Growing the Cart: the Instacart IPO
According to PYMNTS’ ConnectedEconomy Monthly Report one in six consumers said that they purchase groceries online. They surveyed more than 2,600 customers across the US and found that 15.8% get groceries home-delivered every week.
Online grocery shopping skyrocketed during the pandemic as people were forced to explore online deliveries. Instacart slowly became the digital convenience store that offered good produce and timely deliveries.
People would be interested in the Instacart IPO as it is not only an established player, but also works with over 500 retailers across the country. The company has been consistently readjusting its goal posts and making changes to stay relevant and trending.
The company launched a “The World is Your Cart” campaign in August, featuring Lizzo as it reinvented itself as a one-stop-shop destination, transforming the Instacart shopping experience.
In their quest for continued improvement, Instacart has also acquired Caper, a company that focuses on smart cart artificial intelligence technology. The Instacart Marketplace has advanced search technology that points customers to products they want and related things. For example, if a customer is shopping for a salad, it would automatically recommend salad dressings.
In the past, CEO Fidji Simo has mentioned that Instacart will continue to evolve to support retailers and customers. “I want to attract investors that understand this long-term vision and understand what we’re trying to do, and so, there’s no rush,” said Simo in March.
Instacart Valuation: A Moving Target
In preparation for the Instacart IPO, the delivery company has adjusted its valuation for the third time this year. In March, Instacart valuation was shifted from $39 billion to $24 billion. According to Barrons, it quietly readjusted its valuation to $15 billion in July. Insiders told The Information that the company has slashed its internal valuation to about $13 billion ahead of the public offering.
Bloomberg revealed that the third cut in Instacart valuation came about as a result of volatile market conditions. The company plans to sell mostly employee shares during the IPO.
According to The Information and Bloomberg, Instacart’s common stock is now valued at $38 a share. Public delivery stocks have continued to lose value as worried investors are hesitant to part with funds in this economy.
A Risky Business
While grocery adoption rose in the two years of the pandemic, high inflation has squeezed household budgets. A recent Bricks Meet Clicks/Mercatus Shopping Survey found that online grocery spending was up by 6% year-over-year in June, rising to $7.2 billion. The $7.2 billion represents a drop from the $8.7 billion in total e-grocery spend found in the Mercatus Shopping Survey covering the numbers for March. Experts speculate that customers might be going back to in-store shopping to avoid the added cost of delivery.
Due to high inflation and a shifting economic landscape, many IPOs have underperformed in the market. In recent times, many stocks have performed exceptionally well during their debut, and lost their valuations over time.
As predictions of a recession loom large, the post-Instacart IPO price drop could shave off a chunk of your savings. The Instacart IPO date is yet to be announced but experts estimate the time is near. However, there is no real data on what the potential price of the shares will be. The grocery delivery is one of the most awaited upcoming IPOs of 2022.
