Instacart’s Going Public – At A Serious Discount

Instacart’s Going Public – At A Serious Discount
Stéphane Renevier, CFA

6 months ago2 mins

Mentioned in story

What’s going on here?

Instacart – the biggest online grocery delivery company in the US – has set a pretty underwhelming price range for its upcoming listing.

What does this mean?

Once soaring to a valuation of $39 billion during the 2021 pandemic boom, Instacart has now set its sights a whole lot lower for its public debut – at around $9.3 billion. Born in San Francisco and nurtured by big names like Sequoia Capital, the delivery giant became indispensable during lockdowns. But as we edged toward a post-pandemic world, the company wound up facing headwinds. And while it’s commendable that Instacart’s become profitable in a challenging space, it’s facing a slowdown in growth, tighter margins, and investors who’ve grown wary of once-celebrated tech unicorns.

Instacart valuation

Why should I care?

For markets: What goes up often comes down.

In its heyday, Instacart stood as a beacon of tech success, cashing in on pandemic shopping shifts and investors' love for bright tech prospects. But all good things must come to an end, especially with rising customer acquisition costs and fierce competition threatening its dominance. That’s not to say that Instacart’s reduced valuation has landed it in the bargain bin, though. Sure, it’s priced more attractively than competitor Gopuff, but it still demands a premium compared to industry stalwarts like DoorDash and Uber. And being the market’s Goldilocks – not too high, not too low – may not be the worst move in these interesting times.

The bigger picture: A barometer for private tech.

Instacart’s looming debut is a litmus test for VC-backed tech startups, especially after a two-year lull. And its performance could foreshadow a new trend for IPOs – ushering in an era of humbler valuations after the pandemic’s giddy highs. But while a stumble might spook other startups, a smooth launch could inspire them – especially cash-strapped firms that have put off launching because of worries about their valuations.

VC investment down
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