Instacart’s listing on Nasdaq results in a 43% surge in shares

The shares close at $34.23, marking the second successful IPO within a week, subsequent to the sale of the UK chip designer Arm.

Instacart’s stock witnessed a 43% surge during its Nasdaq debut on Tuesday, marking a significant boost for the online grocery delivery company. Despite a partial retracement of gains later in the trading session, the shares ultimately concluded the day with a little over a 12% increase. This surge in stock price represents the second successful initial public offering (IPO) within a week, following the sale of the British microchip designer, Arm.

Instacart’s shares began trading at $30 and closed at $34.23, leading to a company valuation of approximately $11 billion. This valuation is roughly half of what it received from investors in the previous March.

While Instacart’s primary business involves dispatching couriers to grocery stores for order fulfillment and home delivery, the company has diversified in recent years, venturing into advertising and technology services, including operations in artificial intelligence.

Instacart executives presented the offering as a chance to participate in a transformation of the grocery industry, emphasizing that it had notably lagged in adopting technologies to align with changing consumer habits.

Compared to pre-pandemic levels, American shoppers are increasingly relying on online platforms for grocery purchases, with a surge in demand for home delivery services. However, their frequency of ordering has decreased. Instacart, which had experienced years of losses, has recently attained profitability, even as it contends with strong competition from Uber and DoorDash.

Instacart’s stock offering garnered backing from significant investors, including PepsiCo, Norway’s Norges Bank, and Sequoia Capital.

Among those reaping the rewards of the IPO is Apoorva Mehta, aged 37, who co-founded the company in 2012 and stepped down from his role as CEO in 2021. Mehta’s ownership stake of 10% in the company is presently valued at an estimated $1.3 billion.

Currently, Instacart boasts a staff surpassing 3,000 employees and around 600,000 “shoppers” – these shoppers operate as independent contractors handling order fulfillment. The company has declared its plan to offer bonuses to shoppers who have fulfilled a minimum of 5,000 orders and a significant $20,000 bonus for those who have accomplished at least 15,000 orders.