Instacart, the leading online grocery delivery service in the U.S., has priced its initial public offering at $30 per share, valuing the company at around $10 billion. The IPO comes amid strong growth in the online grocery delivery market, as more consumers have embraced the convenience of getting groceries delivered to their doorstep.
Instacart IPO Raises $660 Million Despite Challenging Market
Instacart raised $660 million through the IPO by selling 22 million shares, even as tech stocks have taken a battering recently due to rising interest rates and inflation concerns.
While the company was valued at $39 billion last year, the latest valuation shows more conservative expectations in the current environment. However, Instacart is betting that demand for online grocery delivery will remain strong.
The company is set to start trading on the Nasdaq exchange under the ticker symbol “ICART” on Tuesday.
Online Grocery Delivery Surges During Pandemic
Founded in 2012, Instacart has grown rapidly by partnering with over 600 retailers to deliver groceries to customers across over 5,500 cities in the U.S. and Canada.
The company saw its revenue jump 39% in 2021 to $1.8 billion as demand for online grocery delivery surged during the pandemic. Instacart has emerged as a leading player in the segment along with competitors like DoorDash and Uber Eats.
Growth Prospects Remain Despite Competitive Pressures
Looking ahead, analysts see strong growth prospects for Instacart as the penetration of online grocery delivery increases. However, the company faces risks from intensifying competition and ongoing criticism over its labor practices.
Instacart aims to maintain its first-mover advantage by expanding partnerships with retailers and improving its technology. The company also plans to accelerate investment in services like advertising and enterprise deliveries.
Bottom Line for Investors
The online grocery delivery market still has significant room for growth, and Instacart is well positioned to capitalize on this opportunity. However, investors should weigh the company’s future prospects against competitive and regulatory risks before jumping into the IPO.
