Instacart Sets IPO Price at $30 a Share, Valuing Company at $10 Billion
San Francisco-based grocery-delivery company Instacart has priced its highly anticipated initial public offering (IPO) at $30 per share, making it the first notable venture-backed tech firm to enter the U.S. public market since December 2021. The pricing of the offering is at the top end of the expected range of $28 to $30 a share, valuing Instacart at approximately $10 billion on a fully diluted basis. The company plans to debut on the Nasdaq Stock Market on Tuesday under the ticker symbol “CART.”
Instacart experienced a surge in demand during the COVID-19 pandemic as more people turned to online grocery shopping. However, to attract public market investors, the company had to dramatically decrease its stock price. In early 2021, Instacart raised funds at a valuation of $39 billion, or $125 per share. The IPO is expected to provide insight into whether other billion-dollar-plus companies in the pipeline are willing to test the market.
Despite sacrificing growth for profitability, Instacart’s business model has proven to generate earnings. In the second quarter of this year, the company reported a 15% increase in revenue to $716 million, a slowdown compared to the previous year’s growth of 40%. However, in the latest quarter, Instacart recorded $114 million in net income, a significant increase from $8 million the previous year.
Instacart faces competition primarily from Amazon and major brick-and-mortar retailers such as Target and Walmart, which have their own delivery services. Sequoia Capital, Instacart’s largest investor, holds a fully diluted stake of 15%, while co-founder Apoorva Mehta owns shares worth over $800 million. Mehta, who has been executive chair since 2021, will be selling a small portion of his shares in the IPO. Fidji Simo, formerly of Facebook, succeeded Mehta as CEO and is assuming the role of chair.
Goldman Sachs and JPMorgan Chase are leading the underwriting for the IPO. Only about 8% of Instacart’s outstanding shares were floated in the offering, with 36% of those being sold by existing shareholders. Co-founders Brandon Leonardo and Maxwell Mullen will each sell 1.5 million shares, while Mehta will sell 700,000 shares. Former employees, including those in executive roles, product, and engineering, will collectively sell 3.2 million shares.
The success of Instacart’s IPO, along with the upcoming debut of cloud software vendor Klaviyo, could influence the direction of the tech IPO market and encourage other billion-dollar companies to explore public offerings.
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