6 things to know about Instacart's upcoming IPO
The grocery delivery technology company plans to go public in the coming weeks
Instacart, the well-known grocery delivery technology company based in San Francisco, has filed paperwork on August 25 with the U.S. Securities and Exchange Commission to go public through an initial public offering on the NASDAQ stock exchange under the symbol "CART." The IPO is expected to take place in the coming weeks.
Here are six key points:
PepsiCo has committed to purchasing $175 million in convertible preferred stock in a private placement.
Instacart's CEO, Fidji Simo, highlighted the significant potential of the online grocery market in a letter to investors. Despite the $1.1 trillion U.S. grocery industry, only 12% of sales are currently made online, a number Simo expects to double over time. The company's aim is to help retail partners grow and stay competitive in the evolving digital landscape.
Instacart, founded in 2012, previously filed privately for an IPO in 2022 but postponed due to market uncertainties. However, with a more favorable market environment this year, it is now proceeding with the IPO. The company is anticipated to raise up to $1 billion through the offering.
Instacart's services cover 85% of U.S. grocers and over 80,000 stores, boasting 7.7 million active customers spending around $317 monthly. While its order volume grew by 18% from 2021 to 2022, it experienced slower growth this year, with orders up by less than 1% in the first half of 2023.
Competitive pressures come from rivals like Walmart, which controls a larger share of the online grocery market at 62% compared to Instacart's 22% in July (down from 27% the previous year). Third-party apps like DoorDash and Uber Eats are also expanding in the grocery sector.
Despite these challenges, Instacart's revenue increased by 31% to $1.47 million in the first half of 2023, attributed largely to higher advertising fees collected from retailers and food companies. CEO Fidji Simo, a former Facebook executive, has emphasized growing advertising to make delivery more cost-effective for customers.
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