Instacart: Is It the Right Time to Go Public? – invest.ch

This month, Instacart filed an IPO application with the US SEC (Securities and Exchange Commission). The growing demand for online grocery orders and of course the pandemic have boosted the company’s business in recent years.

By Esty Dwek, CIO

Still, Instacart recently trimmed its own valuation to align with real-world market conditions, which have become far from ideal for a company preparing to go public. Some investors are even wondering if Instacart is having a better time waiting for the current crisis to end, but the company wants to move on.

Who is Instagram?

Instacart is an American grocery delivery service in the United States and Canada. It is based in San Francisco and offers its services through a website and mobile application.

Simply put, Instacart is the Uber Eats of grocery delivery. Its customers can order groceries from member retailers.

Growth boosted by the pandemic

Instacart, like many early-stage tech companies, has been spurred on by the lockdown imposed by the pandemic.
According to eMarketer, Instacart had less than 11% of online grocery sales in 2019 and its market share doubled to nearly 22% in 2020. Its revenue grew nearly 2.5 times between 2019 and 2021.

05/25/2022.Instacart has returned
Instacart Earnings (Source: https://www.businessofapps.com/data/instacart-statistics/)

Today, the company has more than 600 national, regional and local retailers and ships from nearly 55,000 stores in more than 5,500 cities across North America. Instacart’s platform is available to over 85% of US households and 90% of Canadian households.

But the company decided to lower its own rating!

Due to tremendous growth, Instacart’s rating has tripled between 2020 and last year. Still, the company has proactively trimmed its own valuation by nearly 40% to $24 billion to adjust to difficult market conditions, including rising inflation leading to much tighter Fed policy, a higher interest rate outlook, and weaker liquidity.

2022.05.25.Instacart review
Rating by Instacart (Source: https://www.businessofapps.com/data/instacart-statistics/)

And then?

According to eMarketer, Instacart grocery sales will grow to $35 million by 2023. Such a jump would mark a nearly 50% increase over 2020 for Gopuff, Blue Apron, Grubhub, Postmates, and DoorDash.

Meanwhile, Uber Eats, a strong competitor, is expanding its business into grocery delivery in North America and Europe and has the potential to limit Instacart’s expansion in the medium to long term.

Instacart wants to differentiate itself through the use of artificial intelligence

Last October, Instacart acquired an artificial intelligence (AI) startup called Caper AI, known for developing a “smart” shopping cart equipped with a screen and AI. Smart Cart recognizes products as they are added to a shopper’s shopping cart and automatically bills customers for their purchases.

Instacart said the acquisition will help retailers unify the in-store and online shopping experience for customers and support their stores no matter how customers choose to shop.

Users can also see personalized product suggestions on their screens based on what they have in their shopping cart. This latest addition will also help Instacart collect valuable consumer data to increase sales.

05/25/2022.Smart Cart
Caper’s smart shopping cart (Source: caper.ai)

Is now a good time to go public?

Instacart could go public by the end of the year with no specific date. While the company expects the offering to close later this year, it’s also possible that the schedule will be pushed back.

However, given the less than ideal market conditions, investors are wondering if the company is timing it well to go public.

Probably not. That’s why the number of IPOs in 2022 has plummeted from last year’s peak.

May 25, 2022. IPO
IPO falls (Source: https://stockanalysis.com/ipos/statistics/)

Price volatility and the prospect of Fed policy tightening threaten the strength of the post-pandemic recovery. Investors and companies are increasingly aware of the risk of a global recession, and less than ideal market conditions are persuading companies to postpone IPO plans until uncertainties are dissipated.

Instacart doesn’t necessarily want to delay its debut, however, as the company looks to capitalize on the momentum of the pandemic and keep capital growing no matter how difficult real-world market conditions get.

With that in mind, Instacart may not have a mind-blowing IPO like the tech newcomers in 2021 amid bullish market euphoria.

But it’s also worth noting that 70% of companies that went public last year are trading below their IPO prices. Looking back, an IPO last year wasn’t as juicy as you might think!

Also, Instacart won’t be listed for several months, so the timing of its IPO could be ideal: right after a stock market crash.

Better hurry up!

Another grocery delivery app, Getir, has emerged from the darkness in recent years. Turkish Delivery Group is expanding its operations in Europe and the United States and was recently valued at nearly $12 billion. Getir plans to go public in New York next year.

The growing competition in the food delivery industry is sure to weigh relatively heavily on the profits of the newest entrants, as the most important thing in the delivery business is to achieve the critical scale to offer a competitive service.

So future winners in the industry need to grow fast, which would justify Instacart’s decision as investors remain mixed on the timing of the IPO.

Go to www.flowbank.com

#Instacart #Time #Public #investch

Leave a Comment

Your email address will not be published.