In a sign of new demand for tech stocks, Instacart priced each of its shares at $30 for its initial public offering on Monday, at the top of its expected range.
The San Francisco-based grocery delivery company had estimated its shares would be worth $28 to $30 a share. Instacart raised $660 million in the offering and was valued at $9.9 billion, significantly less than its previous private fund-raising round in 2021, which valued the company at $39 billion.
The shares will begin trading on Tuesday on the Nasdaq Stock Exchange under the ticker symbol CART.
Instacart’s offering represents the largest gap between the company’s private and public market valuations, serving as a reality check for other highly valued, closely held startups. Many companies that raised money during the bullish period of 2020 and 2021 have cut their rising valuations over the last year.
But the fact that Instacart has withdrawn its IPO may give hope to other companies looking to take advantage of the public markets. Before last week, it was the worst year for IPOs since 2009, according to private equity market EquityZen.
Instacart’s pricing follows last week’s successful debut for chip designer Arm. Arm’s stock price was at the top of the proposed range and rose 25 percent on its first day of trading.
Following Arm’s IPO, Instacart increased its offered price range.
Instacart’s path to the public market, along with Klaviyo, a marketing tech company that will also list its shares this week, has been closely watched from Silicon Valley to Wall Street. A positive reception may inspire more companies to use public markets to raise funds.
Founded in 2012, Instacart was one of several “gig economy” start-ups that use a network of contract workers to deliver on-demand services like takeout, housecleaning and rides at the tap of a button on an app. Many such companies went out of business or were sold, while the biggest players — Lyft, DoorDash and Uber — have struggled to turn a profit.
Instacart managed to do this by expanding into more profitable businesses like advertising and software tools under former Meta executive Fiji Simo, who took over as the start-up’s chief executive in 2021. The company generated revenue of $2.5 billion last year, an increase of 39 times. percent from a year earlier, with a net profit of $428 million.
Nevertheless, it has endured turbulence. After a spike in orders from people stuck at home during the first year of pandemic lockdowns, Instacart’s growth slowed significantly in 2021. Last year, its grocery orders increased 18 percent from 2021, and orders in the first half of this year were flat compared with a year earlier.
Instacart tried to show confidence about its public offering by securing a $175 million investment in its IPO shares from PepsiCo ahead of its listing. Sequoia Capital, which has a 19 percent stake in Instacart, and D1 Capital, which has a 14 percent stake, were also among a group of companies that said they were interested in buying Instacart’s $400 million IPO shares.
That was enough to lure Wall Street investors back after years of bumpy performance from young tech companies.
Instacart co-founder Apoorva Mehta, who stepped down as chief executive in 2021, owns an 11 percent stake. At $30 a share, his stake is worth $869 million.
Meredith Kopit Levien, chief executive of The New York Times, sits on Instacart’s board.
