Instacart’s valuation looks to be tumbling just as it prepares for an initial public offering. Based on peers, it could have incinerated $32 billion of value in the past two years, says jennifersaba
to the Wall Street Journal on Tuesday. In some ways, that’s very promising. The pandemic accelerated growth for companies like Instacart, as people opted for food delivery services to avoid crowded stores and restaurants. But other companies that benefitted from lockdowns, like Peloton Interactive
, have seen growth slow significantly. At least Instacart seems to have done enough to form a consumer habit. There are two problems, though. The first is that Instacart may not yet have a viable business model. Though the numbers are somewhat scant, the company made some $100 million in adjusted EBITDA in the fourth quarter. Even if that were annualized, it would suggest margins are a slim 16%. That’s higher than DoorDashSecond, as a result of investors favoring profits and not growth, similar publicly-listed firms have seen their own valuations fall significantly.
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