Grocery delivery app Instacart submits confidential filing to go public

Instacart, the grocery delivery app that saw an explosion in demand during the coronavirus pandemic but recently cut its internal valuation by 38 per cent, said it had submitted its confidential filing to go public.

The company did not offer any indication of timing for its debut, though executives had previously signaled that a float might be possible this year, depending on market conditions.

A spokesperson would not confirm whether Instacart was planning an initial public offering, as is more typical, or a direct listing, in which no new money is raised and only existing shares are put on the market.

In March, Instacart reduced its internal valuation from $ 39bn to $ 24bn, adding that it was confident in its business but it was not “immune to the market turbulence that has impacted leading technology companies”.

Wednesday’s announcement came as the tech sector has suffered a rout in the public markets, with the tech stock-heavy Nasdaq Composite index down 28 per cent year to date.

Instacart’s ecommerce peers in public markets have been particularly hard hit, with market-leading restaurant delivery company DoorDash down 59 per cent year to date, while Uber has dropped 49 per cent, and Amazon tumbled 38 per cent.

Investors are turning their backs on previously attractive high-growth tech businesses with strong top-line figures in favor of less volatile sectors such as energy, noted analyst Brent Thill of Jefferies.

Instacart is working with Goldman Sachs and JPMorgan on the listing, according to one person familiar with the arrangements.

The company’s flotation has been long awaited. In January 2021, the company announced it had hired Goldman Sachs banker Nick Giovanni, who had previously been involved in IPOs from Airbnb and Twitter, as its new chief financial officer.

It also added Peloton chief executive Barry McCarthy, a former finance chief of streaming platforms Spotify and Netflix and the architect of Spotify’s 2018 direct listing, to its board as an independent director.

By March of that year, the company heralded a valuation of $ 39bn after raising $ 265mn from its existing investors, buoyed by the frantic adoption of online grocery shopping during the pandemic.

In July, chief executive and founder Apoorva Mehta was abruptly replaced with former Facebook executive Fidji Simo. Carolyn Everson, a former Facebook marketing executive, was brought on board in September 2021 with the view to help Instacart grow its advertising platform – but left three months later, citing a “mismatch” in priorities.

More recently, increased competition from the likes of Amazon, which has invested heavily in its grocery delivery operation through Whole Foods, and rapid delivery apps such as Gopuff have placed Instacart in a considerably more crowded market.

The online grocery market has shown signs it is pulling back slightly as shoppers become more comfortable returning to stores. According to Brick Meets Click, a grocery consultancy group, US online grocery sales in April totaled $ 8.1bn, down 3.8 per cent from the same month last year. Grocery delivery made up almost one-third of that total amount, with sales dropping 6 per cent year on year.

Simo has positioned Instacart as a friend to existing grocery store players and has pledged to never carry its own inventory, unlike its rivals. The company partners with 70,000 stores and a range of retailers that represents 80 per cent of the US grocery industry.

In a blog post on Wednesday, which did not mention the company’s plans to list, Simo wrote: “At Instacart, we believe the future of grocery belongs to those that invented it – not tech goliaths or newcomers trying to drive grocers out of business. ”

Additional reporting by Miles Kruppa in San Francisco

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