Recently, the IPO (Initial Public Offering) market has become interesting to a large number of completely new investors who have not even been participants in the stock market. There is one big reason — profitability. The average return after the lock-up period is 40.5%, which corresponds to 162% annual in dollars (excluding commissions and personal income tax). In this article we will discuss the key details of Instacart IPO: the history of the company, when is the Instacart IPO date, Instacart IPO price and everything you should know to make a decision whether to invest in it or not.
Instacart is an online grocery delivery service. Actually, the largest one in the world according to their website. Last year, there was so much buzz around Instacart going public, not just due to the general buzz around IPOs, but also due to the success of the business during the pandemic.
Prior to Instacart Apoorva Mehta, a former Amazon employee, had tried to kick start 20 other ideas (what a persistence!). The 21st product was Instacart, a product of the Y Combinator batch 2012. It originally launched in San Francisco, and in 3 years expanded to major cities, such as Chicago, Boston, Atlanta, Miami and Washington DC. The total headcount by that time was 200 employees.
In 2017 the Amazon of groceries raised $400 million in funding at a valuation of $3.4 billion. The same year it started delivering in Canada in partnership with Loblaw Companies.
Before the Instacart IPO release, the whole history of the company is about reaching out to the new regions and changing pricing policies that would satisfy personal shoppers, customers and leave a bit of money to the company for growth.
Firsty, you would pay gratuity to the personal shopper who would pick and deliver groceries for you. Then they replaced it with service fees that would go to shoppers, but it caused a huge discontent among employees. So they brought the tips page back along with the service fee.
Now the delivery fee is $3.99 for orders of $35 or more and $7.99 under that amount. Regardless of the cost of the order, there is a 5% service fee with a minimum of $2 owed. Instacart offers a membership service called Instacart Express for a monthly fee of about $9.99 or an annual fee of $99. The membership service waives delivery fees on orders over $35, but customers must still pay the service fee for the shopper. Customers are also requested to leave a gratuity.
2018 was super successful for the company since it announced partnership with almost every major national retailer in the States and Canada, followed by investments of around $871 million and valuation to $7.87 billion. With such huge success it was the right time to ask ‘When is Instacart going public?’
Not until 2020, when the service boomed and had to employ 300,000 people to meet up with the demand, there were rumors about Instacart stock IPO.
Talking about Instacart IPO date and price…
Instacart’s Public Listing Key Data and IPO Date
IPO Date: TBA
Share price: N/A
Valuation at IPO: N/A
CEO: Fidji Simo
Category: Retail Stocks
The company has not yet announced whether it is going public via traditional IPO or via the Special Purpose Acquisition Company (SPAC), preferred by many companies in the past few years.. As well as Instacart stock IPO date has remained discreet.
So far we know that the company decided to focus on growth initiatives and was undergoing managerial changes. Thus, Apoorva took over as Executive Chairman of the Board and he was replaced by Fidji Simo, who will hopefully soon announce Instacart IPO 2022.
Some analysts argue that the momentum for Instacart stock IPO has passed by, because another famous delivery service went public in 2020, Doordash, with a valuation at IPO of $32.4 billion.
But as some examples show, sometimes it’s better to wait longer to build a solid growth foundation and hence, strong financial results for investors, rather than rush into the hype IPO process. (Take WeWork IPO, for example)
Even though the Instacart IPO price is not yet available to calculate valuation, but the company was last valued at $39 billion in a March 2021 private funding round, which is more than Doordash’s current market cap.
So What About Investing Now?
The Instacart IPO delay might have been a good move from the new CEO taking in consideration the current volatility on the market.
The company has been growing 300-500% in the last years but with a projected slow down in 2021 revenues. Skeptics say there’s tightening competition on the grocery delivery market, but Instacart’s market share in metro areas is around 50% and this can’t just disappear at the moment. On the contrary, it’s been growing 20-30% a year. Surely, the situation like in 2020 won’t (hopefully) happen again, but they took this time to sign exclusive contracts with major retailers and take over more market share. In fact, 18 of the top 20 retailers (Costco, Kroger, Publix, Ahold, and so on) have exclusive contracts with Instacart and have their backend run by Instacart. Uber’s and Doordash’s market share is less than 10%.
instacart still has a pretty firm grip on customers and retailers and doesn’t plan to loosen up. They expanded business into the advertising service by promoting products from food companies on its site. Promotions are important for Instacart's business model because it will lower prices for customers. Simo says that if the company wants 30% of people to order groceries online, they are going to have to make online grocery shopping cheaper overall.
So you might probably watch out for the Instacart IPO date, which we will add as soon as they announce this long-awaited event.