Instacart said late Wednesday night that it had submitted Form S-1 to the Securities and Exchange Commission for a possible initial public offering.
According to Bloomberg, the delivery company is partnering with Goldman Sachs and JP Morgan possible offerwhich Instacart said is not yet the final choice.
There were rumors of an IPO last year, although there were some speculations Instacart abandon the traditional IPO route and go direct route list instead. In direct listing, the company does not create new shares and simply sells existing shares to the public. Underwriters are not involved, so it lowers the price, but the company does not receive direct income from the sale of shares. Those who currently hold shares in the company can sell directly to the public, and they receive unexpected financial returns, if any. In this case, there are usually no blocking agreements.
Reuters reports that Instacart has not yet decided the route he can take to public markets. The company, which raised $ 265 million in a funding round in March 2021 in which the company was valued at $ 39 billion, recently revised its assessment downwards up to $ 24 billion with reference to market conditions.
Andreessen Horowitz, Sequoia Capital, D1 Capital Partners, Fidelity Management & Research Co. LLC and T. Rowe Price Associates Inc. are some of the Instacart fans.
The exact time when the IPO will take place is not reported.
The competition is rich in fast delivery
Instacart faces stiff competition from major retailers such as Walmart and Target, which are investing heavily in last-mile shipping, and Softbank-backed GoPuff, too. preparing for an IPO and recently acquired the Finnish Wolt for $ 8 billion, significantly expanding its global affiliation.
DoorDash (COM)NYSE: DASH), GrubHub (NYSE: GRUB), and Uber Eats (NYSE: UBER) offer national competition, and smaller, regional firms such as Jokr and Gorillas are moving forward, promising 15-minute delivery. According to Statista, the food market online will be reach $ 135.2 billion this year, increased from $ 112.9 billion in 2021 and will grow to $ 187.7 billion by 2024, so there are plenty of opportunities ahead in the market, and convenience is a major factor in consumers ’purchasing decisions. In a recent survey, Consultancy Chicory stated that 46% of customers with online products cited convenience as a major factor when making purchasing decisions.
Should Instacart go public?
Writing for Forbes in early April, Forbes advisers Taylor Tepper and Benjamin Curry outlined the case. pros and cons IPO Instacart.
The couple noted that Instacart continues to increase market share, moving from 11% market share in the e-commerce product space in 2019 to more than 22%. They also noted Instacart’s ambition to go beyond groceries.
Current market conditions were cited as an argument against the IPO. It is noteworthy that the competitor DoorDash since November 2021 has reduced the share price by more than 50%. They also pointed to a 60% drop in the value of Shopify shares since November; Zoom, the big beneficiary of the pandemic, whose stocks fell 56% last year; and Peloton, whose share price fell from $ 150 a share to a range of $ 20.
Watch: Retailers overestimate holiday demand?
“These market reversals illustrate why Instacart’s management has taken a very unusual step in lowering its own rating, and suggests why now is not the time for the company to aggressively conduct an IPO,” they wrote. “All four of the above names have made significant profits due to their ability to provide their customers with goods and services to improve the lifestyle in a home pandemic. Today, the market is not impressed by their plans to play after the pandemic.
Instacart works locally
Last summer, Instacart announced it would begin construction robotic execution centers for grocers to process their orders online.
“Our next-generation initiative brings together our robust technology suite and dedicated customer community with robotic solutions to give retailers even more innovative ways to compete and serve their customers online,” said Mark Schaaf, Instacart’s Chief Technology Officer, at the time. “Our next-generation work will also help reduce some of the things that make in-store shopping bulky for Instacart shoppers, such as crowded aisles in stores, items that are missing, and long queues at the checkout.”
“The Instacart model is to empower retail retailers to better serve their customers. We use the same approach by creating Carrot Warehouses, a network of nanorealization facilities that we work on behalf of retailers to help retailers provide their customers with unrivaled speed and choice, ”said Daniel Dunker, vice president of products for Instacart. in a press release.