Monday, 2 October 2023

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Instacart Prices Shares at $30; Signals IPO Market Recovery – TipRanks Financial Blog

Instacart Prices Shares at $30; Signals IPO Market Recovery – TipRanks Financial Blog

Instacart priced its initial public offering (IPO) at $30 per share on Monday, bringing the grocery delivery company’s valuation to $9.9 billion on a fully diluted basis. This offering came in at the top end of the anticipated range of $28 to $30 per share, reflecting the recovery in the IPO market following the successful debut of Softbank (SFTBY)-backed British chip designer Arm Holdings (NASDAQ:ARM).

Instacart’s IPO fetched $660 million through the sale of 22 million shares. Shares are scheduled to start trading on the Nasdaq on Tuesday under the ticker symbol CART.

More on Instacart’s IPO    

After a slump of more than one and a half years due to high interest rates and macro pressures, the IPO market is finally seeing a rebound. Last week, Arm Holdings made an impressive market debut, with shares closing 25% higher on the first day.

On Friday, Instacart raised its IPO target price to the range of $28 to $30 from the previous range of $26 to $28 in reaction to the positive response to Arm’s IPO.

Certain investors, including Norges Bank Investment Management, a division of Norges Bank, and entities affiliated with venture capital firms TCV, Sequoia Capital, D1 Capital Partners, L.P., and Valiant Capital Management, have agreed to purchase up to $400 million worth of shares in the IPO.    

Additionally, beverage and snack food giant PepsiCo (NASDAQ:PEP) has agreed to buy $175 million of preferred convertible stock in a private placement.

While Instacart has now priced its IPO at the top end of the expected price range, its valuation is way below the $39 billion valuation assigned in early 2021, when the company raised money from prominent venture capital firms.

Instacart witnessed robust growth during the pandemic due to a surge in online orders and e-commerce. However, growth has normalized since the reopening of the economy. In the first six months of 2023, the company’s revenue grew 31% to $1.48 billion. Further, the company swung to a profit of $242 million in the first half of the year from a loss of $74 million in the comparable period of 2022.  

Meanwhile, on Monday, marketing automation company Klaviyo also raised its proposed IPO price range to $27 to $29 per share, compared to the previous range of $25 to $27 per share. Overall, improving investor appetite for new issues could trigger more IPOs in the months ahead.


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