Maplebear Inc. has announced the pricing of the highly anticipated Nasdaq IPO of its online grocery subsidiary, Instacart, at a valuation of approximately $10 billion. In a recent Securities and Exchange Commission filing, the company disclosed the sale of 22 million shares at $30 each, placing the San Francisco-based group at the higher end of its target range. This pricing strategy ultimately pushes the group’s valuation to a staggering $9.9 billion, raising around $660 million in the process.
However, this significant IPO valuation represents a nearly 75% drop from its previous private fundraising round in March 2021, when the company was valued at $39 billion. This drastic decrease can be attributed to the surge in at-home shopping during the height of the Covid-19 pandemic. Notably, the majority of the IPO’s proceeds are expected to come from ‘cornerstone’ investors such as Norges Bank Investment Management, Sequoia Capital, and D1 Capital Partners. Despite the excitement, some experts are advising caution, suggesting that the timing may be more favorable for Instacart’s owners than for everyday investors.
Instacart’s IPO Valued at $10 Billion, A Sharp Drop from Previous Valuation
Maplebear Inc. has announced that its online grocery business, Instacart, will debut on the Nasdaq with a valuation of approximately $10 billion. According to a Securities and Exchange Commission filing, the company has sold 22 million shares at $30 each, a price at the higher end of its target range. This pricing would value the San Francisco-based group at nearly $9.9 billion.
A Fundraising Success Amidst a Major Valuation Dip
Through this initial public offering (IPO), Instacart is poised to raise about $660 million. However, two-thirds of this total is expected to come from cornerstone investors such as Norges Bank Investment Management, Sequoia Capital, and D1 Capital Partners. Despite this promising IPO, the $9.9 billion valuation represents a drastic 75% decrease from its valuation in March 2021. At the height of the Covid pandemic, when online shopping surged, Instacart’s valuation reached a staggering $39 billion.
Concerns Over Timing and Market Conditions
David Trainer, CEO of investment research firm New Constructs, voiced concerns about Instacart’s IPO. He noted that it appears to be another instance of a company that missed the IPO frenzy of 2021 and has been waiting for the right time to enter public markets. Trainer warned that while it might be the right time for Instacart’s owners to cash in, it may not be an opportune time for everyday investors. He cautioned investors against succumbing to IPO hype.
Riding on the Coattails of ARM Holdings’ Success
Instacart increased its listing prices last week, following the successful debut of U.K.-based chip designer ARM Holdings on the Nasdaq. ARM Holdings listed its shares at $51 each and saw a nearly 25% increase on its opening day of trading. Instacart shares started trading on the Nasdaq Global Select Market under the ticker symbol ‘CART’.
Takeaways
Instacart’s IPO marks a crucial juncture in the company’s journey. Despite a considerable drop in valuation, the company has managed to raise significant funds, primarily from cornerstone investors. However, as David Trainer points out, investors must remain cautious and not give into the hype. The success of ARM Holdings’ IPO might have influenced Instacart’s decision to increase its listing prices, but only time will reveal if this strategy pays off in the long run.
