Instacart shares rose 12% in their Nasdaq debut on Tuesday after the grocery delivery company’s long-awaited IPO.
The stock initially popped 40% to open at $42, but closed at $33.70 as investors locked in their initial gains.
The offering late Monday at $30 a share valued Instacart at about $10 billion on a fully diluted basis, down from a private market valuation of $39 billion at the height of the Covid pandemic in early 2021. At Tuesday’s close, the company is worth just over $11 billion.
U.S. to go public since December 2021, and its performance is being closely tracked by venture firms and late-stage startups that have been waiting for investors’ risk appetite to return. The Nasdaq has rebounded this year after a dismal 2022, but companies that went public before the downturn are still trading at a steep discount to their peak prices. Software developer Klaviyo is expected to hit the market soon.
Several startups' valuations have shrunk since 2022 as inflation, geopolitical tensions and the Federal Reserve's rapid rate hikes soured the economic climate.
Investors had speculated that Instacart's debut, along with those of chip designer Arm and RayzeBio (RYZB.O) last week, could encourage other startups to test the waters and potentially revive the IPO market after a near 18-month dry spell, albeit at lower valuations than during the exuberance of 2020 and 2021.
Instacart executives pitched the offering as an opportunity to get in on a revolution in the grocery business that, they said, had notably lagged in developing technologies to meet shifting consumer habits.
US consumers are ordering more groceries online than they did before the pandemic, when demand for home delivery soared, but they are doing so less often. Instacart has only recently started making profits after years of losses and faces strong competition from Uber and DoorDash.
Instacart’s share offering was backed by big investors, including PepsiCo, Norway’s Norges Bank and Sequoia Capital.
Instacart opened for trading Tuesday and rose 40% higher than its initial IPO price.
The stock was most recently trading at $39.18, but opened the day at $42, giving it a fully diluted valuation of $13.9 billion.
The company’s IPO was hotly awaited by investors after chip designer Arm Holdings saw a big pop in its shares during its Nasdaq debut last week. The stock was more recently trading at $55.37.
Sandal maker Birkenstock and marketing-automation platform Klaviyo are the next ones on tap.
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