Shares of Instacart are currently struggling to keep up with the rise recorded in the company’s debut on the Nasdaq.
Instacart (NASDAQ: CART) shares have crashed almost 11% on its second day of trading, nearly erasing all of its IPO gains. As of writing time, Maplebear Inc., doing business as Instacart, is trading at $29.85, a 0.83% reduction from its $30.10 close.
The grocery delivery company debuted on the Nasdaq on Tuesday and spiked 40% to $42 shortly after opening. However, Instacart shares retraced some of the gains and eventually closed the day at $33.70, 12% higher than its opening price.
Deepwater Asset Management managing partner Gene Munster warned on Tuesday that the initial rise seen in Instacart shares was “misleading.” In a conversation with CNBC’s Closing Bell, Munster said the spike was typical of initial public offerings (IPOs). He also added that buyers of Instacart shares should be careful and remember that the grocery delivery firm’s year-to-date (YTD) unit growth has been flat.
“The question investors should ask today: Do you believe order growth will reaccelerate? My view on that is I think that it will improve from flat, but it’s not going to be as exciting as Uber,” said he.
Instacart initially planned to list last year after filing for a confidential IPO with the United States Securities and Exchange Commission (SEC). However, the company decided to postpone the listing due to the extreme stock market volatility at the time. The plan at the time was to do a direct listing, which does not require the issuance of new shares. A direct listing only sells shares held by existing shareholders, including employees, management, and private investors.
In September, Instacart cut more than a few jobs after its mid-year performance reviews. According to reports, the retrenchment mainly affected low-level workers and only a few senior staff. Reports also specified that no top executive lost their job. The job cuts were part of a cost-cutting campaign, which also included team meetings getting scrapped and a heavy reduction in travel.
Instacart IPO Reflects Swing in Share of Recently-Listed Companies
The Instacart IPO is one of three major public listings this year, with SoftBank Group’s Arm Holdings and market automation company Klaviyo as the other two. Arm jumped about 25% on its debut, selling 95.5 million American Depositary Shares (ADS) starting at $56.1. The company’s shares closed its first day of trading at $63.59 and climbed to $65.61 in after-hours trading. Arm’s Chief Financial Officer Jason Child said that the company sold $735 million worth of shares to several strategic investors, including Samsung, AMD, Intel Corp, Google, Nvidia Corp, Taiwan Semiconductor Manufacturing Company (TSMC), and Apple.
Shopify-backed Klaviyo listed on Wednesday on the New York Stock Exchange, rising over 20% from its debut price. KVYO shares traded at $39.47 during the day and closed at $32.76. As of writing time, shares have fallen 4.30% from the closing price to $31.35 in premarket trading.
In its latest quarter, Klaviyo reported a 51% revenue growth, to a $164.6 million total. The company also said its net income hit $10.9 million, a big jump from the $11.7 million loss recorded the year before.