Retail

Grocery Tracker: Instacart’s National Push

Which grocery stocks look most likely to see May flowers?

Costco shares saw a spike in value mid-week in the last week of April trading, rising above $178 as the company announced that its Board of Directors has declared a special cash dividend on Costco common stock. The dividend of $7 per share will be payable May 26, 2017, to shareholders on record at the close of business.

The move comes a week after Barclays upgraded Costco stock to overweight, raising its target price to $185 per share. Costco’s value rise held through to the end of the week, with COST shares trading at $177.30 mid-morning on Friday, looking to close out April on a high note. COST has grown 10.6 percent so far this year.

Kroger (KR) shares, on the other hand, continue their bumpy ride through April, skirting the $30 line. This week looks to end below, with KR shares on Friday morning taking a downward turn from Thursday’s close. At the time of writing, KR traded at $29.89, down 0.86 percent for the day and 13.4 percent since the beginning of the year — though still up from year-to-date lows seen in mid-March.

Whole Foods (WFM) continued to see growth in the last week of April, though Friday knocked it down a notch. Still, Jana’s activism will likely continue to positively influence investor sentiment and share value with it as long as the prospects for innovation (and maybe even a sale) stay in sight for the organic grocer. At the time of writing, WFM was trading at $36.53, down 1 percent from Thursday’s close, though still well up for the year to date.

While international food retail group Ahold Delhaize (AD) has seen value drop consistently since the beginning of March, the last week of April trading indicated signs of a rally, closing the month out on an up note. Whether or not this bodes for future growth in May has yet to be seen. At the end of the week, AD shares closed out trading at €19.06, up 0.08 percent from Thursday’s close and up €0.24 for the week.

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After closing a $400 million Series D round at a valuation of $3.4 billion back in March, grocery delivery startup Instacart is eyeing some major U.S. expansion prospects.

As of today, Instacart operates in 41 U.S. markets and is slated to roll out to four more this week in Detroit, Columbus, Ohio, Las Vegas and the Rio Grande Valley region of Texas. As Instacart’s VP of Product Elliot Shmukler told TechCrunch, the startup’s goal is to have its service available to 80 percent of households in the U.S. by 2018.

This expansion, along with free membership offers to Instacart Express in Texas and the Midwestern markets above, will mean that the startup will look to hire at least 1,000 new employees. The startup will also be looking to invest in marketing, which the company says it has yet to do.

Some worry that Instacart may be bound for a bubble given its massive stockpile of cash — over $674 million all told — and compare the startup to the defunct Webvan.

However, TechCrunch said that there isn’t much likeness in context or operations.

“We really want to expand aggressively, blanketing the country with Instacart,” CFO Ravi Gupta was quoted as saying. “We have found an economic model that works, and now we want the majority of the country to be able to use our service.”

If anything, for others looking to break into the grocery space (Amazon), this massive expansion plan on the part of Instacart could be cause for some concern.

While the hypothetical sale of Whole Foods to a grocery disruptor like Amazon could put a dent in Instacart’s market share to date (Instacart delivers groceries from Whole Foods in over 20 U.S. states), the organic grocer is just one of 135 grocery partners. And with 80 percent national coverage, these current stats wouldn’t come as much of a loss.

Likewise, if anyone other than Amazon buys up Whole Foods, the organic grocer goes private or if a sale isn’t in the cards, Instacart will be free to expand uninterrupted.

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