The first thing to know about the Instacart initial public offering (IPO) – which technically begins Monday as high-net-worth individuals and institut
ional investors obtain their shares but begins trading on Tuesday – is that common opinion is calling this a quite reasonably-priced IPO.
Even though the firm raised its share price range last Friday by $2 to a range between $28 an $30 per share, the IPO seems undervalued by comparison to other digital or tech companies. Instacart earned $114 million in net income in the second quarter that ended in June. If we use that figure to drive a $456 million annual run rate, then Instacart is going to market at a Price-to-Earnings Ratio of less than 22.
Instacart is expected to raise between $616 million and $660 million after selling 22 million shares on Monday. This will value the firm somewhere between $9.3 billion and $9.9 billion. That valuation could look a little higher if the Wall Street book runners decide to purchase an additional 3.3 million shares over the following 30 days.IPO last week was oversubscribed somewhere around 10-to-1, it would be unsurprising if the price moved toward the top of the range on Monday or even higher.
Instacart was founded in San Francisco in 2012 and now works with 1,400 different retailers to deliver food via contract workers. Total order count grew from 223 million to 263 million between 2021 and 2022 but has flatlined in the first half of 2023 despite revenue growing. Instacart will trade under its parent company’s moniker – MapleBear – and debut under the ticker symbol CART.Information on these pages contains forward-looking statements that involve risks and uncertainties.
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