Instacart Going Public: A Look at the Company's IPO
In May 2022, Instacart, an online grocery delivery company, made a confidential filing for an IPO with the SEC, but the economy was still stable at that time. However, some people considered this move to be risky, and not many investment banking companies recommended that the firm pursue an IPO. Nonetheless, Instacart intended to go ahead with its IPO plans. In October 2022, however, Instacart decided to cancel its IPO plans. Before we further dive into it let's understand the company.
What is Instacart?
Instacart is a grocery delivery service that allows users to order groceries online from a variety of local stores, and have them delivered to their doorstep within just a few hours. The service was founded in 2012 and has since grown rapidly, expanding to more than 5,500 cities across North America.
Instacart's business model is simple, the company partners with local grocery stores, and uses its network of shoppers and drivers to fulfill orders placed through its app or website. Customers can choose from a wide range of products, including fresh produce, pantry staples, and even household items like cleaning supplies and pet food. Instacart charges a delivery fee and a small markup on the cost of the groceries, which allows the company to generate revenue while offering competitive pricing to its customers.
Instacart’s 2022 IPO fiasco
In October, Instacart made an announcement that it was scrapping its IPO plans, but it left open the possibility of going public in the future. The company attributed its decision to the market's volatility, which posed a significant risk to its IPO. During that time, the value of Instacart also decreased to $13 billion, a notable decline from its previous valuation in 2021.
Despite the cancellation of the IPO, the question remains as to what Instacart's current position is regarding going public. There have been no official statements from the company on the matter, and it is unclear whether it still intends to pursue an IPO or not. Nevertheless, some industry experts believe that Instacart may still be exploring different options, such as a direct listing or a merger with SPAC, to go public. Regardless of the path it chooses, going public could help the company raise more funds, improve its brand recognition, and potentially expand its services to more markets.
Instacart’s Plans on being public are still alive
According to a report by CNBC, Instacart has not ruled out the possibility of going public in 2023. Although the company had canceled its plans for an IPO in 2022 due to unfavorable market conditions, it may still consider the option in the future. It seems reasonable for Instacart to hold back on its IPO during a time of market uncertainty.
Despite the IPO delay, Instacart's financials remain strong. In 2021, the company generated $1.65 billion in revenue, which is a 10% YoY increase. Additionally, it has over $1 billion in cash and marketable securities, which provides a solid financial foundation for the company. Furthermore, The Wall Street Journal reported that Instacart achieved profitability in Q2 of 2022, indicating that it has a stable and sustainable business model.
By assessing its performance in 2022, Instacart will be in a better position to make an informed decision on whether to proceed with its plans to go public. If the company decides to go public, it could potentially raise more capital to fund its expansion plans and increase its brand visibility. An IPO could also provide an opportunity for investors to share in the company's success as it continues to grow in the competitive grocery delivery market. However, the company will need to carefully consider market conditions and ensure it is well-positioned to navigate any potential challenges that may arise.
Instacart takes measured steps toward potential IPO in 2023
Instacart is carefully weighing its options before moving forward with its IPO plans. The company's bankers held "testing-the-waters" meetings with investors in July 2022 to gauge interest in the stock. However, according to media reports, the timing of the IPO remains uncertain and could change depending on various factors.
To prepare for its potential IPO, Instacart has taken several steps to improve its operations. In July 2022, the company's co-founder, Apoorva Mehta, stepped down as chairman and appointed CEO Fidji Simo as her successor. Simo joined the company in August 2021 and has been leading Instacart's efforts to expand its market share and improve its services.
As Instacart continues to assess market conditions and make strategic improvements, it remains unclear when the company will launch its IPO. However, the company's strong financials and market position suggest that it has the potential to be a successful public offering. If Instacart decides to proceed with its IPO plans, it could provide an opportunity for investors to invest in a growing and profitable company that is transforming the grocery delivery market.