"Instacart Ahead of IPO Lowers Target...Company Valuation Below $10 Billion"

Instacart, a grocery delivery company known as the "American version of Market Kurly," is gearing up for a New York Stock Exchange listing.

[Image source=Reuters Yonhap News]

The Wall Street Journal (WSJ) reported on the 10th (local time), citing sources, that Instacart is conducting a roadshow for investors this week, targeting a valuation of $8.6 billion to $9.3 billion.

This is a significant reduction compared to the estimated $39 billion valuation in 2021, when the online shopping boom triggered by the pandemic was still ongoing. WSJ noted, "Since then, rising interest rates have lowered valuations for high-growth startups." Intensified competition in the delivery market and increased market volatility have also had an impact.

Sources explained that Instacart is expected to start the roadshow as early as Monday and will likely adjust its final target valuation based on investor feedback during the event. Initially, Instacart planned to complete its initial public offering (IPO) by the end of this year, but withdrew the plan last year amid growing market uncertainties. It has since been reported that the company aims to go public by the end of this year.

Instacart's second-quarter performance improved ahead of the IPO. According to results released last month, Instacart posted a net profit of $242 million in the first half of the year, turning profitable after a net loss of $74 million a year earlier. First-half revenue was estimated at approximately $1.5 billion, up about 31%. However, the number of orders remained relatively flat, suggesting a slowdown in the core delivery business growth. This contrasts with a roughly 24% increase in revenue from advertising and other sources.

On Wall Street, there is analysis that Instacart's IPO, following the British semiconductor company ARM, which has been considered a major IPO, could act as a catalyst for the IPO market, which has been sluggish until now. Marketing automation platform Klaviyo is also set to begin its roadshow this week. Companies such as Birkenstock and Turo are also expected to go public soon. WSJ highlighted this as "a sign of the previously quiet IPO market," noting that "investors and banks will be closely watching."