For the second time in a short time, a billion-dollar IPO took place in New York on Tuesday. The Californian grocery delivery company Instacart received a valuation of just under 10 billion dollars (9.36 billion euros). That was on the high side of expectations.
Instacart’s IPO follows the successful IPO of British chip company Arm last week, with a valuation of more than $50 billion. The successful launch of the two stocks, both listed on the Nasdaq, is seen as a sign that the IPO market is heating up again after a dip of about two years.
Instacart was founded in 2012 by Apoorva Mehta, a former Amazon employee. It sends couriers to existing supermarkets such as Walmart, where they do their shopping, and then deliver them to the home of one of the 7.7 million users. It previously raised $2 billion in capital. An IPO was according to The Wall Street Journal long expected.
The company, which makes only 10 percent of its shares tradable, also makes good money from third-party advertising on the app. This part is growing while income from groceries has stagnated somewhat recently.
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In total, Instacart had a turnover of $ 1.5 billion in the first half of 2023. According to the company itself, this is a third higher than the same period a year earlier. In these six months, Instacart made a profit of $242 million for the first time, after a loss in the same period in 2022. Profitability is said to have been achieved partly due to cost savings implemented in 2022, such as a reduction in the workforce.
Top of bandwidth
Instacart has set the price of a share at $30. That is at the top of the range that the company presented to investors in recent weeks. Instacart is said to have achieved this award partly due to Arm’s success. The company’s share quickly rose by 25 percent shortly after the IPO.
Nevertheless, Instacart’s current valuation is a lot lower than the nearly $40 billion the company was valued at in 2021. Another factor is that Instacart had enormous growth expectations during the corona pandemic. These have now been somewhat tempered. Investors also seem to be more sensitive to the price of a share: many of the companies that went public in 2020 or 2021 are now lower than at the time of the IPO itself.
Several other companies are already ready for an IPO. The best known is the German shoe company Birkenstock, which has been working for months on an IPO that will probably take place in October. Automation platform Klaviyo is also said to be The Wall Street Journal working on a stock launch.