Instacart Prices IPO at $30 per Share
Instacart, the popular grocery delivery company, has priced its initial public offering (IPO) at $30 per share. This makes Instacart the first notable tech company to go public in the United States since December 2021.
The IPO was priced at the top end of the expected range and values Instacart at approximately $10 billion. The offering included the sale of 22 million shares, with 14.1 million shares coming from the company itself and 7.9 million shares from existing shareholders. The stock will debut on the Nasdaq under the ticker symbol “CART.”
Instacart, which partners with grocery chains like Kroger, Costco, and Wegmans, had to significantly reduce its stock price to attract public market investors. In early 2021, the company raised funds at a valuation of $39 billion, but the IPO price was adjusted to make it more appealing.
The tech IPO market has been slow since December 2021 due to inflationary pressures and rising interest rates. Instacart’s performance, along with the upcoming IPO of cloud software vendor Klaviyo, may determine if other billion-dollar companies in the pipeline are willing to go public.
Instacart has prioritized profitability over growth, and its business model has proven to generate earnings. While revenue growth slowed to 15% in the second quarter of this year, the company reported $114 million in net income. At a valuation of $10 billion, Instacart will be valued at about 3.5 times its annual revenue.
Instacart faces competition primarily from Amazon and major brick-and-mortar retailers like Target and Walmart, which have their own delivery services. Sequoia is Instacart’s largest investor, holding a 15% stake. The IPO will also see the resignation of co-founder Apoorva Mehta from the board, with Fidji Simo assuming the role of chair.
The IPO is being led by Goldman Sachs and JPMorgan Chase. Only 8% of Instacart’s outstanding shares were offered in the IPO, with existing shareholders accounting for 36% of the shares sold.