Instacart Sets IPO Price at High End of Expectations

Instacart has announced that it will be pricing its initial public offering (IPO) at $30 per share, which is at the high end of expectations.

At this price, Instacart would have a fully diluted valuation of $9.9 billion, The Wall Street Journal (WSJ) reported Monday (Sept. 18). Its public-trading debut will take place Tuesday (Sept. 19).

This move comes as the IPO market shows signs of resurgence, according to the report. The IPO market has been gaining momentum recently, with investor demand for new issues on the rise. Last week, British chip designer Arm had a successful debut, with its stock surging by 25%.

Encouraged by this positive performance and feedback from prospective investors, Instacart decided to raise its target price range from $26 to $28 per share last week.

However, public investors are now more price-sensitive compared to the booming days of 2021, per the report. Many IPOs from the 2020 and 2021 class are currently trading below their initial prices, resulting in potential losses for funds that invested in those deals. Instacart is aiming for a lower valuation than the $39 billion it commanded in a funding round in 2021.

Founded in 2012, Instacart has become a leading player in the grocery-delivery industry, the report said. The company sends couriers to grocery stores to pick out and deliver orders to customers’ homes. With over $2 billion in venture-capital funding, Instacart has expanded its core business while venturing into other areas such as advertising. It positions itself as a grocery-technology company that can assist food retailers in navigating industry changes by offering delivery, in-store technology, advertising and data services.

Instacart has already secured $400 million in commitments from investors for its IPO, and PepsiCo has agreed to purchase $175 million in convertible-preferred stock in a concurrent private placement, the report said. The company plans to sell less than 10% of itself in the offering. The funds raised will be used, in part, to cover taxes and costs associated with restricted stock units awarded to employees.

When filing its registration statement for a proposed IPO on Aug. 25, Instacart said it is the leading grocery technology partner to more than 1,400 retail banners that account for greater than 85% of the U.S. grocery market.