Instacart (NASDAQ:CART) is gearing up for one of the most-anticipated IPOs of the year and investors will be watching to see if it can emulate the success of chip designer ARM Holdings’ successful debut last week.
The San Francisco-based grocery delivery company plans to list 22 million shares as it starts trading Tuesday under the ticker symbol “CART”.
Ahead of its IPO, it increased its offering range to between $28 and $30 per share, from $26 to $28 previously, which will raise as much as $660 million and give it an implied valuation of as much as $10 billion if it achieves the top end of that range.
The revised range followed ARM’s IPO last Thursday, with a 25% jump in its share price suggesting to investors that the IPO market is reawakening following a two-year hiatus as higher inflation and interest rates resulted in market uncertainty.
Cornerstone investors including Sequoia Capital and D1 Capital Partners, Valiant Capital Management, Norges Bank Investment Management, and TCV affiliates have already indicated that they will buy up to $400 million worth of the Instacart (NASDAQ:CART) shares on offer. In addition, PepsiCo (NASDAQ:PEP) has agreed to purchase $175 million of the company’s Series A preferred convertible stock.
The company’s prospectus noted that its gross transaction volume grew from $24.9 billion in 2021 to $28.8 billion in 2022 and $14.9 billion for the first six months of 2023. It generated an operating cash flow of $242 million in the first half of 2023, compared to $99 million in 1H 2022.
Instacart was founded in 2012 by former Amazon employee Apporva Mehta, who is now the chairman, and entrepreneurs Max Mullen and Brandon Leonardo.
Previous plans to go public were delayed, partly by the Covid pandemic, which put the brakes on food delivery companies and resulted in a significant deterioration in market conditions.
A 2021 fundraising valued the company at $39 billion.
Contact the author at stephen.gunnion@proactiveinvestors.com