On Monday, Instacart priced its shares at $30 each for its initial public offering, at the top of its expected range, in a sign of renewed demand for tech stocks.
The San Francisco-based grocery delivery company. had estimated that its shares would be priced between $28 and $30 each. Instacart raised $660 million in the offering and was valued at $9.9 billion, significantly below its latest private fundraising round in 2021which valued the company at $39 billion.
The shares will begin trading Tuesday on the Nasdaq stock exchange under the symbol CART.
Instacart’s offering shows one of the largest gaps between a company’s public and private market valuations, and serves as a reality check for other highly valued, closely held startups. Many companies that raised money during the boom times of 2020 and 2021 have trimmed their rising valuations over the past year.
But the fact that Instacart achieved an initial public offering could give hope to other companies looking to tap into the public markets. Before last week, this had been the worst year for IPOs since 2009, according to EquityZen, a private equity marketplace.
After Arm’s IPO, Instacart raised its proposed price range.
Instacart’s path to the public market, along with that of Klaviyo, a marketing technology company that will also list its shares this week, has been closely watched from Silicon Valley to Wall Street. A positive reception could persuade more companies to turn to public markets to raise money.
Founded in 2012, Instacart was one of many “sharing economy” startups that use networks of contract workers to provide on-demand services like takeout, house cleaning, and rides with the touch of a button on an app. Many of these companies closed 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. Fiji Simoa former Meta executive who took over as CEO of the new company in 2021. The company generated $2.5 billion in revenue last year, up 39 percent from the previous year, with $428 million in net profits .
Still, it has endured turbulence. After a surge in orders from people stuck at home during the first year of pandemic closures, Instacart’s growth slowed sharply in 2021. Last year, its grocery orders grew 18 percent over 2021, and Orders in the first half of this year remained stable compared to the previous year.
Instacart attempted to project confidence about its public offering by securing a $175 million investment in its PepsiCo IPO shares ahead of its listing. Sequoia Capital, which owns a 19 percent stake in Instacart, and D1 Capital, which owns 14 percent, were also among a group of companies that said they were interested in buying $400 million in shares from Instacart’s IPO. .
It was enough to bring Wall Street investors back to the table after several years of rocky performance by young tech companies.
Apoorva Mehta, the Instacart co-founder who stepped down as CEO in 2021, owns an 11 percent stake. At $30 a share, his holdings are worth $869 million.
Meredith Kopit Levien, CEO of The New York Times, is on Instacart’s board of directors.