Categories IPO, Retail

Grocery delivery app Instacart moves closer to IPO; raises offer price

The company raised its offer price following the blockbuster stock market debut of SoftBank-owned tech firm Arm Holdings

The e-commerce sector witnessed strong growth in recent years as the pandemic-induced restrictions spurred an online shopping boom. As a result, new players are entering this lucrative market that is currently dominated by Amazon.com. Grocery delivery company Maplebear Inc., doing business as Instacart, recently set terms for its long-awaited initial public offering.

Offer Price

The San Francisco-based company has applied to list the stock on the Nasdaq Global Select Market under the symbol ‘CART.’ The company is offering around 22 million shares of its common stock at an estimated offer price between $28.0 per share and $30.0 per share. The management is yet to disclose the date of the IPO, which is expected to happen later this month.

The offer price was revised up after the blockbuster Nasdaq debut of SoftBank-owned chip designer Arm Holdings on Thursday. The price initially set by the management was $26.0-$28.0 per share. Arm shares rose an impressive 25% on the first day of trading and gained 34% in premarket trading on Friday.

The IPO

Instacart, a market leader in grocery delivery and pickup, had announced its plan to go public long ago. The company is currently valued at $10 billion, which is well below the valuation the market had set a couple of years ago. At the top end of the revised offer price, the IPO will fetch around $660 million, compared to the earlier target of $616 million. The company plans to use the net proceeds from the offering mainly to meet its anticipated tax withholding and remittance obligations related to the settlement of certain outstanding restricted stock units.

Founded in 2012, Instacart has been providing on-demand delivery to customers from stores of their preference. It has partnerships with more than 1,400 retail banners that represent about 85% of the US grocery market, which allows the company to offer a variety of store options. That, combined with its presence across the country, makes Instacart the preferred grocery app for many.  

Road Ahead

The online grocery market is at an early stage of grwoth, with the majority of shoppers still relying on brick-and-mortar stores for their grocery requirements. So, a huge opportunity is awaiting companies like Instacart.

For the six months ended June 30, Instacart reported revenues of $1.48 billion, compared to $1.13 billion in the corresponding period of last year. Net income attributable to the company’s shareholders was $27 million or $0.27 per share in the six-month period, compared to a loss of $74 million or $1.03 per share a year earlier.

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