IPO News: Tracking Instacart’s long-anticipated IPO in a virus-hit market

After a soft start to the year, the IPO market has begun gaining momentum and a slew of high-profile listings are in the pipeline. Among the latest IPO aspirants, online grocery delivery platform Instacart, Inc. is cashing in on the digital shopping boom that followed the widespread disruption caused by the coronavirus outbreak.

In IPO Mode

In what could be a move aimed at taking forward its long-anticipated public listing, the company appointed IPO specialist Nick Giovanni as chief financial officer earlier this year. However, the management is yet to reveal the timetable and other details of the IPO. More recently, the company added Frank Slootman to its board of directors, a few months after the software industry veteran successfully led Snowflake, Inc. through its IPO.

Last month, Instacart raised $265 million by selling its stock to existing shareholders. After the fund-raising, the company’s valuation nearly doubled to around $39 billion. The management intends to use proceeds from the offering for investing in the business and for hiring new employees, after expanding the workforce significantly last year.

Direct Listing?

According to unconfirmed reports, the company will likely avoid the conventional IPO method and go for a direct listing. Also, there are reports that the IPO might be delayed until year-end, in view of the pandemic-related uncertainty.

Also Read: After defying pandemic, IPO market is bracing for another busy year

The California-based company has been witnessing a steady increase in the demand for its delivery and pickup services. The trend bodes well for it because grocery is touted as the largest retail category, and it is expected to account for the lion’s share of e-commerce sales in the coming years. Instacart executives bet on the shift in customers’ shopping behavior after COVID-related restrictions forced people to flock to online marketplaces. But, the digital-only business model puts the company at the risk of losing out to omnichannel retailers that operate extensive store networks, in the long run.

Key Statistics

Instacart reportedly generated revenues of $1.5 billion in fiscal 2020. Interestingly, the company turned profitable during the pandemic and ended the year with around 9.6 million active users. It added around 200 new retailers and 15,000 new stores last year, besides expanding the same-day delivery and pickup services to several new categories. With an impressive cash balance, Instacart is one of the most valuable startups.

Among others preparing for their Wall Street debut, cryptocurrency exchange Coinbase has set April 14 as the date for its IPO. Last week, online education provider Coursera started trading on the New York Stock Exchange under the ticker symbol COUR.