Instacart is one of the most watched IPOs of the year.
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Instacart’s initial public offering was priced at $30 per share on Monday evening – at the high end of the expected range – and early signs on Tuesday morning suggested the stock could open significantly higher.
Trading data from Nasdaq suggests a potential opening price of $40, up about 35%.
The San Francisco-based company said late Monday that it had sold 22 million shares at $30 each, the high end of its previously planned price range of $28 to $30. At $30 per share, Instacart has a market value of $9.9 billion based on the company’s fully diluted share count.
The IPO raised a total of $660 million, of which around $420 million went to the company. The company is expected to begin trading on the Nasdaq on Tuesday under the symbol “CART.”
Following last week’s listing of chip designer Arm Holdings (ticker: ARM), Instacart is one of the most closely watched IPOs of the year. Taken together, they are likely to open the window for the IPO market, which has been quiet for most of the year. Klaviyo, a marketing software company, is also expected to go public this week.
Arm saw significant demand for its shares, with its opening share price 10% higher than the IPO price, but enthusiasm has since waned. Shares fell 4.5% on Friday and closed the same loss on Monday.
How Instacart trades on Tuesday and beyond will depend on investor confidence in the future of the gig economy’s expansion and profitability. Maplebear, as Instacart is officially called, generated sales of $2.55 billion last year, up 39% from the previous year. About three-quarters of that revenue came from the company’s core business of delivering groceries to homes using contractors. The rest was generated by other services and a new offering called Instacart Ads, in which retailers pay to show ads to customers.
Instacart reported net losses of $70 million and $73 million in 2020 and 2021, respectively. In 2022, the company generated net income of $428 million, much of which came from a tax benefit of $358 million.
At $30 per share, Instacart is valued at nearly four times its annual revenue. DoorDash (DASH), which is named as a competitor in Instacart’s filings, has a similar price-to-sales ratio of 4.1. DoorDash has steadily increased annual revenue since going public in 2020, but the company has not yet achieved earnings per share.
Instacart also lists UberEats, part of Uber Technologies (UBER), and Shipt, owned by Target, as competitors.
Instacart, which was founded in 2012, After a long wait, the IPO was officially filed on August 25th – the company had initially filed a confidential registration statement for a possible IPO in May 2022. In its private fundraising round, Instacart was valued at $39 billion, miles away from its current valuation.
Write to Karishma Vanjani at [email protected]