Everything You Need to Know About the Upcoming Instacart IPO

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instacart IPO

The grocery delivery service, Instacart, is soon releasing its IPO, making it one of the most anticipated offerings of the year. The pandemic came as a business booster for online retailers and delivery services as people preferred getting things delivered to their homes than going to crowded marketplaces.

Instacart, taking advantage of the situation, grew rapidly during this period. The company is now set for its IPO this year, which has kept many potential Instacart investors hooked to their seats.

In this guide, we discuss Instacart valuation, stock price, IPO release date, and much more.

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What is an IPO?

IPO refers to an initial public offering in which a privately owned company makes its shares available for public purchase.

Since the Instacart IPO announcement has led to many people planning investments in the company, it is important to understand that IPOs come with their fair share of risks and are not merely money-making opportunities.

Why Do Companies Like Instacart Go Public?

Now, that might make some of you wonder; why do companies go public? Why is Instacart going ahead with its initial public offering? The main reason for this is to let the initial investors cash out the investments they made in the company.

For a private company to be set up, someone has to invest in it. Over time, the investors may want to sell their shares and use the money to invest in another venture. That does not always mean the company they are taking their money out of is going into loss.

It simply means they want to diversify their portfolio.

In that case, the company goes public, allowing public investors to buy shares. Along with that, there are some other reasons companies may go public:

  • Additional Capital: With IPOs, companies can raise a lot of capital that can be used to expand the business. In Instacart’s case, there’s a huge demand for online delivery services. Instacart may use the money from the IPO to expand its services and bring new features to the company.
  • Publicity: An IPO is a sure-shot way to bring publicity for the company, especially if the business is already doing well. Instacart has maintained impressive momentum during the pandemic, and the company aims to continue working at the same pace. The publicity that comes with the Instacart IPO can help fuel the company’s transition to an even bigger deal than it is today.
  • Cheaper Alternative: Companies can raise capital through venture capitalists, bank loans, and private investors. However, these methods are quite expensive. On the other hand, even though IPOs involve a lot of paperwork and some degree of expenditure, they are a cheaper way to raise money for the business.

What Should You Know About the Instacart IPO?

One thing is evident; Instacart is doing great, and it’s expected to do well in the future too. So, if you plan on investing in the company, Instacart going public should be your cue. However, before you do that, here are a few things you should know.

1. IPO Timing

The major question most people have is; when will Instacart go public? Currently, there is no Instacart IPO date since the company has not filed the documents with the Securities and Exchange Commission, which is the authority overseeing public companies.

Instacart, however, has been working for over a year to go public. Although an IPO is expected, some reports suggest that Instacart will go public through a direct listing.

Experts expect that Instacart IPO will be open for the public later this year or in 2022 since the year is almost over.

2. IPO Valuation

Among the things to know about Instacart, one of the most important factors is the IPO valuation. By keeping the Instacart market cap into consideration, you can determine if the company is worth the investment.

Fortunately, the company’s valuation is seen at a whopping $39 billion. It may be lower than its competitor DoorDash, standing at $71 billion, but very impressive for a new company, to say the least.

Some experts believe that the company’s valuation could be up to $50 billion, making it one of the biggest IPOs of 2021.

3. IPO Backers

After a company’s documents are authorized and approved by the SEC, they can price their IPO with consultation from the backers. These are pre-IPO investors who have a say in how the IPO is released.

If the price is too low, the company can end up missing out on substantial capital. But if the price is too high, the demand for the stocks may get lower. Therefore, Instacart stock price has to be determined after a lot of consideration by all stakeholders.

Companies typically hire underwriters to come to an IPO price that will help the company raise significant capital while ensuring a steady demand. In Instacart’s case, the underwriter is Goldman Sachs.

The investment bank, along with Instacart’s backers, will set a price for the initial public offering. Similarly, Instacart stock IPO will be determined with the involvement of its backers.

These include Fidelity Management & Research Company LLC, Andreessen Horowitz, Fidelity Management & Research Company LLC, and Sequoia Capital, D1 Capital Partners, to name a few.

4. Instacart Business Prospects

Before you invest in a company, you have to make sure their business prospects seem reliable and profitable for the long term. Sure enough, you don’t want to lose the money you invested.

As for Instacart, the company offers pickup services and delivers groceries and other products for over 600 retailers in the country. It supplies products from 55,000 stores to more than 5,500 cities in the U.S. In fact, Instacart is also available in Canada, making it accessible to a wider customership.

Keeping this in mind, it’s easy to say that Instacart has decent business prospects, both in the U.S. and outside. The company that offers free delivery to Express members , is only expected to increase in size with every passing day, benefiting its investors along the way.

5. Leadership

While Instacart company values have stayed consistent over time, the leadership has changed. The company welcomed its new CEO, Fidji Simo , in August this year. Simo is not an unknown name in the business world as she previously headed Facebook and was the Vice President at the company.

She also helped Facebook become a public company, so her involvement in the Instacart IPO is good news for potential investors. Her aim is to increase Intsacart’s consumers by making appropriate upgrades in the app and business targeting campaigns through ads.

Who Is Instacart Competing With?

Instacart is not the only company with its IPO coming out this year. Stripe and Discord are among two of the many popular companies with initial public offerings scheduled for 2021.

However, Instacart’s trajectory throughout 2021 and 2021 has been quite impressive. In the delivery service sphere, Instacart is up against Amazon, Target, Walmart, and DoorDash.

Earlier in the pandemic, it seemed that Instacart was winning the competition since it overshadowed Walmart, bringing the giant’s share in the grocery delivery market from 50% to 25%.

Instead of fighting, Walmart partnered with Instacart, offering same-day delivery to customers. In this way, both companies were stronger in their competition against Target and Amazon Whole Foods.

In fact, Instacart fostered 200 partnerships alone in 2020, delivering groceries from nearly 600 retailers. With increasing partnerships and massive reach, the company is expected to grow larger in the coming years.

Since DoorDash is more focused on restaurant deliveries and quick delivery from convenient stores its involvement in the grocery delivery sphere is not as prominent as Amazon and Target.

But Instacart’s partnership with Walmart is not the only thing giving investors hope in the company.

Instacart also has an Enterprise service, which offers ecommerce solutions to branded websites, apps, and partner stores on the company’s app. Along with increasing the number of partners, this feature also makes Instacart a stronghold in the tech sector.

Related Article: Shipt vs Instacart

Instacart Direct Listing: What Does That Change?

As discussed above, sources show that Instacart will be going public through a direct listing. What does that mean? How does it differ from an initial public offering?

In an initial public offering, a company creates new shares, underwrites them, and sells them publicly. Meanwhile, in a direct listing, the company sells the existing and outstanding shares without any underwriting.

There are several reasons why Instacart may be opting for a direct listing:

  • Consumer-Facing: Direct listings are not ideal for every company. In the absence of an underwriter, the company has to ensure it can attract the public itself. Now, this makes a lot of sense in Instacart’s case since the company is consumer-facing and has an easy-to-understand business model. Some companies that have previously gone public via direct listing are Slack, Roblox, and Spotify.
  • No Lock-Up Period: In initial public offerings, there is a lockup period during which existing shareholders cannot sell their shares. This helps in preventing an oversupply of shares in the market, which can lower the stock price. On the other hand, direct listings don’t have a lockup period since the existing shareholders are actually selling all the shares.
  • Not for Capital Raising: Instacart raised $265 million in March 2021, doubling the company’s valuation twice in just one year. So, it’s understandable why the company may not go for an IPO, which is primarily for capital raising. Instacart has enough capital to sustain itself. Thus, the direct listing could be suitable for the company.

How Can I Invest in Instacart?

According to Instacart latest news, the IPO is not yet in the market for purchase. Since there is no Instacart IPO date 2021, you cannot buy shares in Instacart yet.

Hopefully, the opportunity will be presented soon enough. Till then, you should know how to invest in an IPO, whether Instacart or any other.

Step 1: Choose a Brokerage Service

To invest in an IPO, you need to have an account on a brokerage site. A stockbroker is an intermediary between investors and the market or stock exchanges.

Previously, you had to hire a stockbroker and invest in stocks by making them trade on your behalf.

Now, you can use an online service. Select a brokerage service of your choice and make an account.

If you’re a beginner, check out this list of the best online stockbrokers that will not only allow you to invest in the Instacart stock IPO but also give you access to tutorials about smart and safe investing.

Step 2: Deposits Funds

After setting up your account, deposit funds in it. This is the money that you will use to trade stocks on the platform. Some brokers let you trade instantly, while others have a waiting period.

Step 3: Invest

Currently, Instacart’s IPO is not public. Once it is, it will be listed on the brokerage site. Then, you can simply search for it and buy as many stocks as you want.

FAQs

How Much Is Instacart Stock?

At the moment, Instacart has not released its IPO so, we cannot possibly know the stock price. The price is determined after keeping the market trends, demand, and other factors in mind. Once the company goes public, the Instacart stock value will be listed on major stock exchanges and brokerage sites.

Is Instacart a Public Company?

Instacart is not a public company yet as it has not filed the documents for the initial public offering. But, the company’s IPO is expected to come out this year or at the beginning of 2022.

When Is Instacart Going Public?

According to sources, Instacart will go public by the end of 2021 or the start of 2022. However, the company has declined to comment on this as it is busy with the legal proceedings of the IPO.

Final Words

To end, we can say that Instacart seems like a potentially lucrative investment, considering its momentum in the delivery service sphere. With its partnerships and investment backing from giants like Sequoia, D1 capital partners and Fidelity, the company’s future seems investor-friendly.

Currently, investors are left in the dark for when the IPO will be in the market. However, once it’s out, we can expect to see it getting plenty of attention.

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