By
Temitope Olatunji
March 11th, 2024
As a publicly traded company, Instacart will need to navigate fierce competitions.
Instacart, the popular on-demand grocery delivery and pickup service has submitted an updated filing for its upcoming Initial Public Offering (IPO), revealing its ambition to raise up to $616 million in fresh capital alongside existing shareholders.
Instacart IPO: Pricing Strategy
In its updated filing, Instacart disclosed its intention to set an offer price for its IPO within the range of $26 to $28 per share. This pricing range is significant, as it not only values the company but also impacts the funds it can raise. If the IPO is priced at the upper end of this scale, Instacart could secure approximately $616 million in proceeds.
To achieve this fundraising goal, Instacart plans to issue a total of 22 million shares. This includes 14.1 million newly issued shares from the company itself and an additional 7.9 million shares being sold by existing stockholders.
The decision to include shares from selling stockholders underscores their confidence in the company’s potential and a desire to capitalize on the IPO. Instacart’s IPO comes at a time when the online grocery delivery market is experiencing unprecedented growth.
The company has established itself as one of the largest players in the US online grocery delivery sector, with a platform that connects consumers with personal shoppers for a seamless shopping experience.
As the COVID-19 pandemic accelerated the shift towards online shopping, Instacart experienced surging demand and secured partnerships with major retailers, further solidifying its position in the market. In the third quarter of 2022, Instarcart’s revenue grew more than 40% year-over-year, while net income and adjusted EBITDA more than doubled from Q2.
Instacart Faces Stiff Competition
Despite its remarkable growth, Instacart is not without formidable competition. Traditional retailers like Walmart Inc (NYSE: WMT) and Kroger Co (NYSE: KR) have bolstered their own online grocery delivery services, while tech giants such as Amazon.com Inc (NASDAQ: AMZN), DoorDash Inc (NYSE: DASH), GoPuff, and Grubhub Inc have also joined the race.
Meanwhile, Instacart’s decision to go public coincides with another high-profile IPO from British chip design firm Arm Holding Ltd. The company is eyeing a valuation of up to $54.5 billion, signaling its confidence in its technological prowess and future growth prospects.
As a publicly traded company, Instacart will need to navigate these fierce competitions while continuing to innovate and expand its services to maintain its competitive edge.
The IPO market has been relatively quiet in recent times, primarily due to concerns about higher interest rates and rising inflation. However, these upcoming IPOs, along with several others in the pipeline, are set to test the waters and gauge investor sentiment. The success or failure of these IPOs will depend heavily on market conditions at the time of listing.