Instacart, the popular grocery delivery app, made a successful debut on the Nasdaq with its shares surging by as much as 43 percent. This impressive performance has resulted in Instacart being valued at over $21 billion. The IPO was priced at the higher end of its range, raising $660 million in total proceeds, with $237 million going to investors who sold their shares.
Interestingly, this valuation is significantly lower than the $39 billion value the company had in its previous funding round in 2021. This decline in value reflects the challenges faced by many startups in the current economic climate, which has been affected by factors such as inflation, geopolitical tensions, and rapid rate hikes by the Federal Reserve.
Despite these challenges, Instacart’s successful debut, along with other recent IPOs such as chip designer Arm and RayzeBio, may help revive the IPO market. However, Neumora Therapeutics’ lukewarm reception last week suggests that investor enthusiasm for new listings is still limited.
David Erickson, a senior fellow and finance lecturer at the Wharton School of the University of Pennsylvania, commented on the current state of the IPO market, stating that it is currently a “buyer’s market.” Companies looking to access the IPO market need to be prepared to offer discounts on the IPO price. However, if upcoming IPOs, including Instacart, price well and continue to trade well, the need for discounts may reduce.
Instacart’s journey to the Nasdaq has been a long one, taking almost three years to prepare for its public debut. The company’s core business turned profitable in 2022 and has continued that trend in the first half of 2023. They also saw a change in leadership in 2021, with former Meta’s Facebook app head Fidji Simo taking over as CEO.
Goldman Sachs and J.P. Morgan are the lead underwriters for Instacart’s IPO.
– The Guardian