By
Mayowa Adebajo
November 29th, 2023
Instacart had a successful IPO and closed the day 12% higher, reeling in $420 million in cash from the Nasdaq offering.
American grocery delivery company Instacart (NASDAQ: CART) has finally concluded its initial public offering (IPO) on the Nasdaq, closing 12% higher on the day. The company’s stock, in after-hours trading, is exchanging hands at $32.95, 2.23% down from its $33.70 close.
The Instacart IPO saw the company’s shares initially spiking 40% to open at $42 but eventually lost some of the gains. As of Monday, Instacart’s valuation was at $10 billion, fully diluted, at $30 per share. This is a considerable reduction from the $39 billion valuation recorded in early 2021 during the Covid-19 pandemic.
Officially known as Maplebear Inc, Instacart boosted its proposed price range last week following an impressive Arm Holdings debut. Media reports stated that the company increased the range to $28 to $30, from $26 to $28 per share.
The Instacart offering saw the company float only 8% of its outstanding shares. 36% of the shares floated were sold by existing shareholders. Reportedly, company co-founders Maxwell Mullen and Brandon Leonardo are selling 1.5 million shares each. Another co-founder, Apoorva Mehta, is selling 700,000. Furthermore, former employees are selling an aggregate of 3.2 million shares.
Founded in 2012, Instacart delivers groceries to its teaming customers from several retail and multi-department stores, including Costco, Kroger, and Wegmans. During the pandemic, Instacart achieved considerable success because of the pandemic lockdowns. In 2021, the company successfully raised funds from venture firms Andreessen Horowitz and Sequoia Capital at $125 per share. The funding round also saw participation from T. Rowe Price and Fidelity.
Instacart IPO Follows Multiple Funding Rounds Over the Past Few Years
In 2020, Instacart raised $200 million from existing investors D1 Capital Partners and Valiant Peregrine Fund. The funding round took the company’s market capitalization to $17.7 billion at the time. Instacart said in an official announcement that it planned to use the funds to develop new products and also introduce new features to improve customer experience.
In the year’s second quarter, Instacart raised revenue to $716 million, increasing 15%. However, this was a significant reduction from the 40% increase recorded for the same period last year. Unfortunately, both increases were nowhere near the nearly 600% rise during the pandemic.
Speaking on the IPO, Instacart CEO Fidji Simo said the listing was to provide employees with stock access to the company. Simo said:
“We felt that it was really important to give our employees liquidity. This IPO is not about raising money for us. It’s really about making sure that all employees can have liquidity on stocks that they work very hard for. We weren’t looking for a perfect market window.”
Last year, Instacart joined several other companies in retrenching and cutting jobs, supposedly to reduce costs. The job cuts came shortly after the company’s mid-year performance review, and directly affected several members of staff. Instacart reportedly cut more than a few low-level employees and some at the senior level. The retrenchment did not affect any top executives.