Instacart Boosts IPO Valuation After Successful Arm Debut

By
Fatima Attarwala
Fatima Attarwala
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Fatima Attarwala is a business news writer and editor with a decade of experience researching, analyzing, and commenting on issues influencing the economy.
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Published September 15, 2023
Instacart gift cards displayed at a Safeway store in San Anselmo, California

Justin Sullivan / Getty Images

Grocery delivery company Instacart raised the proposed price range for its initial public offering (IPO) Friday after chip company Arm Holdings had a strong debut this week.

Key Takeaways

  • Grocery delivery app Instacart bumped its per-share proposed IPO price range from $26 to $28 to $28 to $30, raising its total valuation to $10 billion.
  • The boost in Instacart's IPO price range comes after Arm's IPO Thursday, which led to 25% gains on its first day of trading.
  • A string of IPOs are to follow in the next few weeks, which investors hope will generate renewed activity after an IPO drought.

By revising its terms to target a fully diluted valuation of up to $10 billion, Instacart is signaling strong investor demand for the IPO. Instacart is now seeking to raise as much as $660 million, offering 22 million shares for $28 to $30 per share. Previously, the indicated range had been $26 to $28 for a target of $616 million.

Instacart's IPO is long-awaited and the company is looking to take advantage of an IPO market that is warming up. Chip designer Arm's Thursday IPO was the largest in the U.S. since 2021. Shares of the SoftBank-owned company rose 25% on the first day of trading, which likely fueled Instacart's valuation increase.

Despite that, the largest grocery delivery company in the U.S. is seeking a valuation of billions of dollars less than what it was worth a few years back. In 2021, the company was valued at $39 billion, but a more recently challenging climate for online delivery has dragged its worth down.

Instacart has recently started generating a profit. In the first half of 2023, its profit was $242 million, swinging from a loss of $74 million the previous year.

Among investors interested in Instacart's listing, which will trade under the ticker "CART," is PepsiCo Inc., which will buy $175 million of its preferred stock. If the shares are priced at the top end of the range, cornerstone investors that have committed to purchasing up to $400 million worth of stock will generate about two-thirds of the total proceeds, according to a Reuters report.

Other IPOs in the wings are Neumora Therapeutics Inc., another portfolio company of SoftBank, and marketing firm Klaviyo Inc. German footwear maker Birkenstock Group BV also plans to offer shares in the U.S. in the next few weeks. Investors hope the new listings will perpetuate Arm's robust momentum.

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  1. Reuters. "Instacart Raises IPO Price Range After Robust Arm Debut."

  2. CNN. "Instacart Is in Free Fall as Its Valuation Plunges."

  3. Bloomberg. "Instacart Seeks to Raise $660 Million With Boosted IPO Range." (Subscription required.)

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