The shares conclude at $34.23, marking the second prosperous IPO within a week, following the sale of the UK chip designer Arm
Shares of the online grocery delivery company, Instacart, surged by 43% during its debut on the Nasdaq stock exchange on Tuesday. Although the shares retraced some of their gains later in the trading session, ultimately finishing the day with a little over a 12% increase, this price surge marked the second successful initial public offering (IPO) in a week, following the sale of the British microchip designer, Arm.
Instacart’s shares initiated trading at $30 and concluded at $34.23, resulting in a company valuation of approximately $11 billion. This valuation is roughly half of what it received from investors in the previous March.
Instacart’s core business is to send couriers to grocery stores to pick out orders and deliver them to homes, but in recent years it has expanded into advertising and technology services, including artificial intelligence operations.
Instacart executives pitched the offering as an opportunity to get in on a revolution in the grocery business that, they said, had notably lagged in developing technologies to meet shifting consumer habits.
American shoppers are increasingly turning to online platforms to purchase groceries compared to pre-pandemic levels, a time when there was a surge in demand for home delivery services. However, their frequency of ordering has decreased. Instacart, which had been grappling with years of losses, has recently managed to achieve profitability, though it faces robust competition from Uber and DoorDash.
Instacart’s stock offering received support from major investors, including PepsiCo, Norway’s Norges Bank, and Sequoia Capital.
One of the individuals benefiting from the IPO is Apoorva Mehta, aged 37, who co-established the company back in 2012 and relinquished his role as CEO in 2021. Mehta’s ownership stake of 10% in the company is currently estimated to be worth $1.3 billion.
At present, Instacart boasts a workforce exceeding 3,000 employees and approximately 600,000 “shoppers” – these shoppers are independent contractors responsible for order fulfillment. The company has announced its intention to provide bonuses to shoppers who have completed a minimum of 5,000 orders and a substantial $20,000 bonus for those who have successfully completed at least 15,000 orders.
