Shares of Instacart, an online grocery delivery business, experienced a significant increase of 43% during its trading debut on the Nasdaq on Tuesday. Although the shares later dropped, the day concluded with a gain of just over 12%. The initial trading price for Instacart’s shares was $30, closing at $34.23, resulting in a company valuation of approximately $11 billion. This valuation is lower than the previous one it received from investors in March of last year.
Instacart’s primary business involves sending couriers to grocery stores to fulfill orders and deliver them to customers’ homes. However, the company has expanded its services to include advertising and technology operations, including artificial intelligence. Executives of Instacart positioned the IPO as an opportunity to be part of a grocery business revolution that has been slow in adopting technologies to meet changing consumer habits.
The COVID-19 pandemic has led to an increase in online grocery orders in the US, but the frequency of purchases has decreased. Despite facing strong competition from companies like Uber and DoorDash, Instacart has recently achieved profitability after years of losses. Noteworthy investors, including PepsiCo, Norges Bank of Norway, and Sequoia Capital, supported Instacart’s share offering.
One of the major beneficiaries of the IPO is Apoorva Mehta, the co-founder of Instacart. With a 10% stake in the company, Mehta’s shares are now valued at $1.3 billion. Instacart currently employs over 3,000 individuals and has around 600,000 independent contractors, referred to as “shoppers,” who fulfill and deliver orders. The company has announced plans to provide bonuses to shoppers who have completed a minimum of 5,000 orders and a $20,000 bonus for those who have fulfilled at least 15,000 orders.
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