Instacart IPO Postponed Due to Market Downturn
The food delivery company Instacart is delaying its plans to release an initial public offering in 2022. It says it is a response to current market conditions.
Wall Street investors have been wary about the war in Ukraine, rising inflation, and recession fears. Consequently, they allocated funds to safer options.
The San-Francisco based firm filed documents for a so-called confidential filing. The Instacart IPO would push through once conditions improve, but it is running out of time.
More details about the Instacart IPO
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Confidential filing means the company does not have to reveal specific information about its business. Also, it does not have to go public.
Nevertheless, it is a significant step toward a public offering. Instacart told Reuters that it was considering a traditional IPO or a direct listing.
The former involves issuing new shares, and it can help accumulate capital. However, it requires a lot of time and money.
On the other hand, a company could avoid these hassles with a direct listing. Unlike an IPO, it involves selling shares that the company already owns.
For example, the crypto exchange Coinbase used shares from its CEO for a direct listing. The downside to this option is that it does not help acquire more funding.
Instacart needs more capital to withstand current market turbulence. Thus, an Instacart IPO is more likely than a direct listing.
The Rise, Fall, and Possible Rise of Instacart
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The company started in 2012 and delivered groceries to people’s homes. Instacart has independent contractors who shop and bring groceries to customers.
It was one of the companies that provided essential services during the COVID pandemic. People were stuck at home and relied on delivery apps to buy stuff without going outdoors.
The momentum dropped off in the second quarter of 2021. More people received the vaccine, so they resumed their regular shopping routines.
In March 2022, the company cut its $40 billion internal valuation to $24 billion. The company shared the following statement:
“We are confident in the strength of our business, but we are not immune to the market turbulence that has impacted leading technology companies, both public and private.”
As mentioned earlier, it postponed plans for an Instacart IPO. Aside from returning to normal, consumers feel the sting of rising prices.
They are shopping less frequently as inflation grows. Yet, the delivery company does not intend to get served so easily. Instacart acquired an artificial intelligence startup called Caper AI.
It is developing a smart shopping cart that recognizes products as they land on carts. Meanwhile, the Caper machine charges shoppers automatically.
A 2021 eMarketing analyst noted, “[W]ith advances in fast delivery and click-and-collect capabilities, consumers’ grocery choices will be driven not just by price but also by convenience.”
Conclusion
The Instacart IPO got pushed back in response to adverse market conditions. Yet, the delivery company plans a comeback with better services.
The current bear market spells bad news for many. Yet, a savvy investor sees it as a golden opportunity. The question is, which one are you?
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