Instacart IPO update
Instacart experienced a slowdown in growth in the first quarter, with its gross order volume growing sub 10%, a decline from the 16% growth seen in 2022. The slowdown could potentially delay Instacart's planned public debut.
The effects of COVID-19 and increasing competition in the grocery delivery sector, particularly from firms like DoorDash, may be contributing factors. Despite the slowdown, Instacart still holds a significant market share among online grocery intermediaries. And the company has been waiting for inves’ appetite for public listings to rebound. Still, the slower growth in order volume poses a challenge in achieving a favorable valuation when they go public. However, Instacart has generated cash and has over a billion dollars on its balance sheet now.
For more coverage about Instacart, subscribe to our club letter
IPO MARKET remains FROZEN AF
The IPO market remains shut and frozen, but there are signs that we could be inching toward a reopening. And the key may lie with Instacart, a company that has become almost synonymous with the IPO pipeline for the last few years. Will they or won't they? This is a question that investors and the company itself have gone back and forth on. The financials are lining up according to the reported revenue and profits, up some 50 and 80%, respectively, in the fourth quarter. It was also profitable. So, as good an IPO candidate as any, maybe financial is one piece of the puzzle. Market volatility, of course, is the other, and that is certainly less clear. The CEO said a year ago: “We want to be a public company at some point. The market conditions are a factor, but given that we have a very strong business and do not need to raise much money, the market conditions are not particularly affecting us or our timing.”
OUT TAKE ON FIDJI
Like I said, that was a year ago, and she could pretty much say the exact same thing today. Not much has changed. Instacart may not need to raise a lot of money, but its employees would like to get paid. And that remains tricky when investors are still iffy on risky companies, especially in the gig economy space, which was built during an era of low interest rates and growth at all costs.
IPO timing:
Instacart recently said, OK, our previous high valuation in the private market is no longer justified...
Do we think they will go public over the next 12 months? We think they got it. They'd already filed confidentially, and then they pulled that. So, we know that there is a real desire. Every time Fiji speaks to her workforce, a question constantly comes up. This is one of the oldest unicorns. It's been private for over ten years, so it's got to go. They talk about it a lot. Like Stripe, another unicorn has been private forever. But. Stripe seems to push it off more than Instacart, so we'll see if their conditions improve. If they don't, they could do it via a direct listing. They don't, as we said, need to raise capital. They need to create a liquidity event, and we'll finally get an IPO event for IPO Club!
What is IPO CLUB
We are a club of Investors with a barbell strategy: very early and late-stage investments. We leverage our experience to select investments in the world’s most promising companies.
