Instacart (NASDAQ:CART), the food delivery company, saw shares tumble over 7% on Wednesday despite analysts claiming its performance would begin to silence some of the criticism it received since listing.
In a fourth-quarter update, Instacart (NASDAQ:CART) said its gross transaction volume re-accelerated and would continue to grow in the first quarter of the new financial year.
Goldman Sachs analysts commented: “In our view, this performance begins to mute the ongoing negative narrative about growth outcomes and industry competition that has persisted since the company’s 2023 listing.”
Instacart (NASDAQ:CART) also confirmed it would be cutting 250 jobs, around 7% of its workforce.
Yet, the market was unable to ignore the fourth quarter’s slowdown in advertising revenues and weaker-than-expected sales.
In the longer term, however, Goldman Sachs believes Instacart is “positively exposed to two key secular growth themes”.
The two aspects are the switch by consumers from in-store grocery shopping to the adoption of online channels and “the rise of retail media networks as an area of growth within the broader digital advertising industry”.
“In our view, the company’s two earnings reports since its IPO should be establishing and building investor confidence in these longer-term narratives,” the US bank concluded.
Goldman Sachs rates Instacart a ‘buy’ and targets a 12-month share price of US$48, compared to a current price of around US$26.