Instacart Investor Slashes Grocery Deliverer’s Valuation to $14.7B

Capital Group, an Instacart investor, has slashed the delivery firm’s valuation back to $14.7 billion, a big drop from Instacart’s own calculation of $24 billion, Bloomberg reported Monday (July 18).

Capital Group put the shares at $45.84 at the end of June, it said in a report on the website for its New Economy Fund.

This was the second Instacart investor to say Instacart’s estimate is wrong. That came after Fidelity also lowered its estimate for the private company.

Like others in the food delivery space, Instacart’s surging growth early in the pandemic, when everyone stayed indoors and had groceries delivered, has been offset by post-shutdown declines.

The company was valued at $39 billion in a March 2021 funding round, but cut the internal calculation by March of this year by around 40%.

Fidelity, which bought shares through the company’s private offerings in recent years, has marked down Instacart since the beginning of the year, the report said.

PYMNTS wrote that the demand for restaurant and grocery delivery has been going on, but businesses relying on the channel are now seeing the challenges of the rising costs of the current economy.

That comes as companies like Instacart and restaurant aggregators like DoorDash and Uber Eats are competing with legions of other companies, including ones like Nestle-owned meal delivery service Freshly.

See also: Food Delivery Businesses Tinker With Recipe for Success as Costs Skyrocket

And there are other delivery options which deliver straight from chefs and home cooks to consumers’ doors, like WoodSpoon.

Akhtar Nawab, who owns restaurants in New York, New Orleans and Washington, D.C., and works as a chef, said there were new economic difficulties, including the “very sales- and volume-driven” nature of the business model.

Nawab said the rising prices of food and labor would make things more difficult, along with sales not rising in concurrence with the increases in prices.