Instacart Confidentially Files for an IPO

Pandemic-Driven Demand

Delivery company Instacart grew in popularity during the pandemic as Americans stayed home and ordered their groceries online. It became the largest such operator in the country as big box stores like Kroger (KR) and Walmart (WMT) used its services to fulfill orders from their customers. The company further diversified outside of groceries and delivered products for Best Buy (BBY).

Investors rewarded the company and contributed over $265 million in 2021, bringing its valuation up to $39 billion.

Valuation Cut by 40%

As the pandemic wanes, the company faces diminished consumer demand and increased competition. While sales skyrocketed 330% from 2019 to 2020, growth in 2021 was a relatively paltry 15%. In the face of these changing fortunes, the company recently cut its valuation to $24 billion, a 40% reduction.

CEO Fidji Simo, who hails from Meta Platforms (FB), joined Instacart in 2021, replacing Co-Founder Apoorva Mehta who transitioned to the role of chairman of the board. Recent instability in the executive team has been seen in the departures of President Carolyn Everson and Chief Revenue Officer Seth Dallaire.

IPO to Support Business Expansion

When the new CEO was brought on, Apoorva Mehta indicated that she would be tasked with expanding the business. To that end, market observers noted the company had considered deals with Uber Technologies (UBER) and DoorDash (DASH). Despite deteriorated valuations, Simo now plans to take the company public. A draft registration statement was confidentially filed with the Securities and Exchange Commission, a first step toward an initial public offering.

Due to the extremely volatile public markets, many private companies have put their IPO plans on hold. This makes Instacart’s recent filing notable, especially considering it is a tech driven growth company. Other companies that fit that mold have seen their share prices decrease in light of rising rates. Wall Street will be following Instacart’s path to the public markets closely as a result.

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