Instacart IPO Slashes Valuation to $9.3 Billion

Instacart and its backers set the stage for an initial public offering that may value the grocery-delivery business at up to $9.3 billion, less than a quarter of what it was worth at the height of the Covid-19 pandemic.

(Bloomberg) — Instacart and its backers set the stage for an initial public offering that may value the grocery-delivery business at up to $9.3 billion, less than a quarter of what it was worth at the height of the Covid-19 pandemic.

The company and its backers are seeking to raise as much as $616 million.

The company could still pull off what would be one of the biggest initial public offerings of the year, possibly opening the door to a rebound in US listings at a time when the market for them has been choppy. 

Instacart disclosed last month that it’s facing a rapid slowdown in the growth of its core delivery business and is looking for new ways to make money. Orders on the platform were virtually flat in the first half of 2023 compared with a year earlier as cities reopened and people returned to restaurants and grocery aisles.

The largest US online grocery delivery company will offer 14.1 million new shares for $26 to $28 each, it said in a filing Monday. Existing shareholders are selling 7.9 million shares at the same price.

Including stock options granted to employees and other factors, the company’s fully diluted valuation is $8.6 billion to $9.3 billion, based on Bloomberg News calculations. 

While the value isn’t finalized and could still move higher based on investor demand, it marks a big drop from the pandemic-induced surge. It was valued as much as $39 billion in 2021.

It replaced its chief executive that same year and was forced to cut its internal valuation three times in 2022 to about $13 billion by October. 

In conjunction with the IPO, PepsiCo Inc. is buying $175 million of its preferred convertible stock, Instacart said. The company is considering pricing its listing Sept. 19, with trading starting the following day, Bloomberg News has reported previously. 

Instacart’s listing could help unstick the backlog of companies whose plans to go public have been stymied by the longest lull in US listings since the financial crisis in 2009. The largest of those companies is Arm Holdings Ltd., the semiconductor designer owned by SoftBank Group Corp. that is planning to raise as much as $4.87 billion later this week. 

Others that have either already filed for IPOs or are pursuing them include marketing and data automation provider Klaviyo, Vietnam-based internet startup VNG Ltd. and footwear maker Birkenstock. 

San Francisco-based Instacart, which is incorporated as Maplebear Inc. and filed under that name, saw its revenue grow 31% to about $1.5 billion for the six months ended June 30, aided by supercharged growth in its higher-margin advertising segment. It posted net income of $242 million for the first half of the year, compared with a loss of $74 million for the same period last year. 

The company’s largest investors include Sequoia Capital and D1 Capital Partners, according to the filing. Other investors have included Tiger Global Management and Coatue Management, according to PitchBook.

Instacart’s IPO is being led by Goldman Sachs Group Inc. and JPMorgan Chase & Co., with Bank of America Corp., Barclays Plc and Citigroup Inc. also participating along with 15 other underwriters. The company plans for its shares to trade on the Nasdaq Global Select Market under the symbol CART.

–With assistance from Michael Hytha and Jackie Davalos.

(Updates with valuation information starting in the first paragraph, rewrites throughout)

More stories like this are available on bloomberg.com

©2023 Bloomberg L.P.