Instacart, the popular online grocery delivery service, is making headlines as it gears up to go public with a target valuation of $8 billion. This comes as the company aims to tap into the growing online grocery market, which has seen significant growth in recent years. While Instacart’s valuation is considerably lower than its peak valuation of $30 billion in 2021, the company is confident in its ability to thrive in a competitive industry.
The plan for Instacart’s initial public offering (IPO) includes offering 14,100,000 shares of common stock and an additional 7,900,000 shares, which will trade under the ticker CART. The expected price range for these shares is set between $26 to $28, with the goal of raising around $616 million, as stated in the Securities and Exchange Commission (SEC) filing.
However, Instacart faces tough competition from industry giants like Amazon and Walmart, who are also vying for a piece of the online grocery market. According to Evercore, Instacart currently holds about 22% of the $132 billion U.S. online grocery delivery market.
To help fuel its growth, Instacart has secured a significant investment from PepsiCo. The beverage and snack giant will be purchasing $175 million of Series A redeemable convertible preferred stock in a private placement. This strategic partnership could provide Instacart with the necessary resources to expand its services and stay ahead in the ever-evolving online grocery space.
The decision to go public comes at a critical time for Instacart, as IPOs have slowed down due to inflation concerns and the Federal Reserve’s interest rate hikes. The company hopes that going public will help revive the IPO market, which saw a significant decline in the number of deals in 2022 compared to the previous year.
Despite the challenges, Instacart remains confident in its ability to capture a larger market share and continue its upward trajectory. The company has seen its user base grow to 5.1 million users as of June 2023, up from 4.6 million in the same period the previous year.
It’s worth noting that the IPO of Arm Holdings, another high-profile company, is also expected to take place this week. The successful completion of these IPOs could signal a positive outlook for the market and encourage other companies to pursue their own public offerings.
In conclusion, Instacart’s decision to go public with a target valuation of $8 billion showcases its determination to dominate the online grocery space. As it faces stiff competition from established players like Amazon and Walmart, securing strategic investments and expanding its user base will be crucial factors in its continued success. The IPO market is eagerly watching as Instacart and Arm Holdings set the tone for future offerings, providing a glimpse of the market’s resilience amidst economic challenges.