When the online grocery delivery company Instacart announced a confidential IPO filing with the SEC in May 2022, the economy hadn't yet taken a brutal beating. Still, many viewed the plans for an IPO to be risky at that time. In fact, few investment banking companies were advising firms to go for an IPO. Despite its intentions, in October 2022, Instacart pulled the plug on its IPO plans.
What's the latest update on Instacart's IPO plans?
When Instacart announced its plans to scrap an IPO in October, it didn't completely rule out going public. The company did, however, attribute its actions to volatile market conditions. During that time, the grocery delivery service provider's valuation also dropped to $13 billion, a significant decrease from what it was valued at in 2021. So, where does Instacart now stand on going public?
Instacart, a COVID-19 pandemic darling, has started to wane in value.
Instacart was a COVID-19 pandemic darling along with other delivery business firms. However, as the pandemic has abated and people have started returning to in-store shopping, the value of these firms has waned considerably.
In May 2021, Instacart had a valuation of about $39 billion. It raised $265 million from existing investors, including Andreessen Horowitz, Sequoia Capital, D1 Capital Partners, Fidelity Management & Research Company LLC, and T. Rowe Price Associates, Inc.
Instacart was the fourth-largest U.S. unicorn. In March 2022, the company cut its internal valuation by 38 percent to $24 billion to reflect the bearish market for tech stocks. As reported by Barron’s, the company once again cut its internal valuation by another 38 percent to $15 billion in July. By October 2022, Instacart came back once again with a lower valuation ($13 billion) and less optimism about holding an IPO.
Given the state of the economy and rising inflation, Instacart once again lowered its valuation in December 2022. Reuters reported on Dec. 27 that Instacart had cuts its internal valuation down to $10 billion, according to people familiar with the matter.
Instacart hasn't ruled out going public in 2023.
Despite scrapping its IPO plans for 2022, Instacart hasn't entirely ruled out going public in the future, CNBC reported. In these negative market conditions, it only seems right for Instacart to pump the breaks on holding an IPO.
The company’s 2021 revenues were $1.65 billion, a growth of 10 percent YoY. Instacart has over $1 billion in cash and marketable securities. The Wall Street Journal reported that Instacart was profitable for the second quarter of this year. Perhaps after assessing its performance in 2022, the grocery delivery app can make an informed decision on whether it should proceed with its plans to go public.
Instacart continues to test the waters before committing to the IPO.
In July 2022, Instacart's bankers were approaching investors for “testing-the-waters” meetings. This was done to gauge the appetite for the stock. The media outlet added that the timing of Instacart’s IPO isn't set in stone and things could change depending on several factors.
The company has been taking various steps to make improvements. In July 2022, Instacart’s co-founder, Apoorva Mehta, stepped down as chairman and handed over the leadership role to CEO Fidji Simo, who joined Instacart in August 2021. Mehta continues to work as the executive chairman of the board.