Instacart’s Long-Awaited IPO to Test CEO’s Pivot, Market Rebound

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Online grocery startup Instacart has been flirting with an initial public offering for years and is finally set to take the plunge Monday in another bellwether listing for a still-anxious market.

Instacart, officially Maplebear Inc., is seeking to raise as much as $660 million Monday at a valuation of more than $9 billion and begin trading Tuesday.

Taking its cue from Arm, Instacart is taking the safe route by lining up big investors to support its listing. It’s brought on PepsiCo Inc., one of its partners, to participate in the deal.It’s also enlisted Norway’s Norges Bank, TCV, Sequoia, D1 Capital Partners LP and Valiant Capital Management as cornerstone investors that could take up to 60% of the shares, according to its prospectus.

On Friday, Instacart elevated its target for the IPO to $26 to $28 a share. That could value the company at $9.3 billion to $9.9 billion based on the fully diluted equity listed in its filings.Chief Executive Officer Fidji Simo, who replaced co-founder Apoorva Mehta in 2021, has tried to reshape the business by pivoting to advertising and technology over grocery delivery, taking advantage of the voluminous amount of consumer data it collects to help grocery stores boost sales.

Instacart is also now wrangling more profit from each order. Net income grew as a percentage of gross transaction value, with a profit of 1.5% in 2022 replacing a loss of 0.3% in 2021.Whether that growth can be sustained — especially with orders flat in the first half — is a key question for investors.

“I think them establishing themselves as a delivery channel, allowing things like product placement, marketing partnerships with consumer packaged goods companies, opens up a lot more options for Instacart as a company,” he said.

 

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