Instacart is the pioneering venture-backed tech firm to go public in the U.S. since December 2021.The grocery delivery giant, which was appraised at $39 billion, finalized its first day of trading with a fully diluted valuation of around $11 billion.The stock is being traded on the Nasdaq with the identifier "CART."
Shares of Instacart rose 12% in their debut on Tuesday on the Nasdaq after the grocery delivery company's much-anticipated IPO. The stock opened at $42, representing a 40% rise, but closed at $33.70 as investors capitalized on their profits. The offering late Monday valued the company at around $10 billion on a fully diluted basis, significantly less than its $39 billion private market valuation at the beginning of 2021. Instacart is currently valued at roughly $11 billion. It is among the first notable venture-backed companies in the U.S. to go public since December 2021 and its performance is being closely monitored by venture firms and late-stage startups hoping to benefit from the return of investor confidence.
Instacart had to lower its stock price to draw public market investors, having raised money in early 2021 for $125 a share fromSequoia Capital, Andreessen Horowitz, Fidelity, and T. Rowe Price. Growing revenue by 15% to $716 million in the second quarter, a decrease from 40% year-over-year growth and 600% growth in the early pandemic months, the company cut headcount and spending on customer and shopper support to conserve cash. With net income of $114 million in the latest quarter, compared to $8 million the period before, Instacart is valued at 3.9 times annual revenue. Food delivery giant DoorDash, a competitor cited in Instacart's prospectus, is traded at 4.1 times revenue, despite 33% revenue growth in the most recently reported quarter yet still operating at a loss. Uber, with a similar market cap, is traded below three times revenue; the ride-hailing company's Uber Eats business is also named as a competitor. Big box retailers such as Target and Walmart have also joined the delivery space, with Target having acquired Shipt in 2017 for $550 million.
The IPO brought in $420 million for Instacart, which already had nearly $2 billion in cash and equivalents on its balance sheet as of June. Existing shareholders sold 36% of the 8% of Instacart's released stock, with co-founders Brandon Leonardo, Maxwell Mullen, and Apoorva Mehta collectively offloading 2.2 million shares. Former employees cashed out 3.2 million shares. CEO Fidji Simo expressed the significance of the IPO, saying it was "about making sure that all employees can have liquidity [share ownership] that they work very hard for" as opposed to raising funds.
The offering resulted in Instacart earning more than $420 million in cash proceeds. A previous statement of this information was inaccurate.
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