Instacart goes on the market and to the market, too
Amid stock volatility, Instacart filed for an initial public offering (IPO) in the stock market. In March, the company cut its valuation by 40% ($24 billion), citing market turbulence. Getting funding could be hard because two factors worry investors:
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- Slowed growth: During the pandemic, online grocery shopping skyrocketed, but now consumers are shifting back to their previous lifestyles. In-store selection and discounts are pulling shoppers back. Sales declined nearly 4% in April from last year.
- Competition intensifies: Shoppers have a lot of options. There are apps like Instacart or Uber’s Cornershop. Retailers are creating their own platforms such as Walmart+. Finally, tech giants like Amazon offer nonperishable goods for now… they have aggressive growth plans for Whole Foods and Amazon Go.
- Bad time for the stock market: In the last 6 months, the S&P 500 has fallen 17% and NASDAQ about 28%. In turbulent times investors do not want to make risky decisions and are interested in profitable, trustworthy companies.
Investors usually get excited by IPOs from hyper-growth, behavior-changing tech companies. But lately, there are negative cases, such as Uber, which has dropped 25% since January and is still falling. Still, the overall grocery delivery industry changes make Instacart an interesting company to watch.
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