Grocery delivery platform Instacart generated plenty of buzz on Monday as its updated filing for its initial public offering (IPO) revealed that it seeks to raise up to $616 million of fresh capital alongside existing shareholders. While the Instacart IPO may yield a valuation of up to $9.3 billion, it’s a drop from its prior valuation.
According to a CNBC report, Instacart’s IPO price will land between $26 and $28 per share. Further, the delivery specialist — which officially features the name Maplebear Inc. — will issue 22 million shares in total. This figure comprises 14.1 million newly issued shares from Instacart and 7.9 million shares from selling stockholders.
In addition, the business news outlet noted that Instacart seeks a valuation of between $8.6 billion and $9.3 billion. Including restricted stock units, stock options and warrants, the share count will total 331 million on a fully diluted basis.
As for the anticipated timeframe, Bloomberg reports that the Instacart IPO listing may occur on Sept. 19., with trading starting the following day. Further, the company plans to list its stock on the Nasdaq exchange under the ticker symbol CART.
Instacart IPO Raises Viability Concerns
While CART stock carries the potential of breaking the lull in new public listings, the Instacart IPO raises serious questions with the latest filing update. According to Barron’s, the latest valuation range fell far below the prior estimate of $39 billion set in a fundraising round in 2021.
Moreover, Instacart’s internal valuation last year in March pegged the entity at $24 billion. However, a few months later, in July, this figure again declined to $15 billion, reflecting the technology sector rout. To be fair, investors believe a fresh wave of new listings could arrive in the coming months. At the same time, they risk a similar valuation downgrade as the Instacart IPO.
Still, for greater context, Instacart printed solid financial figures despite rising pressures against the consumer economy. Per its Form S-1 disclosure filed with the U.S. Securities and Exchange Commission (SEC), the delivery service rang up revenue of $2.55 billion in 2022, up 39% from the prior year.
In addition, for the six months ended June 30, 2023, Instacart posted sales of $1.475 billion, up 31% against the year-ago period. Notably, it also printed a net income of $242 million in the first half of this year, faring much better than the $74 million loss in the year-ago comparison.
Nevertheless, major U.S. retailers have already warned about the prospects of fading consumer spending. Thus, CART stock faces significant concerns.
Why It Matters
Despite a broader recovery effort in the equities market, IPO activity has been slow, per EY. In the first half of this year, the global IPO market raised approximately $60 billion, down 36% by value on a year-over-year basis. Still, Reuters reports that the IPO market could surge in the coming months, providing some optimism for CART stock.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
