Instacart (NASDAQ:CART) shares moved lower after Wedbush downgraded the company to ‘Underperform’ from ‘Neutral’ and lowered its price target to $42 from $55, with analysts citing intensifying competition in the grocery delivery space.
“Instacart has demonstrated healthy gross transaction volume (GTV) growth and an improving margin trajectory over the last few quarters, tempering some investor concern,” the analysts wrote.
“That said, the recent expansion of Amazon’s same-day perishable grocery delivery service has intensified the competitive environment.”
Wedbush said it views Amazon’s move as “a pivotal step forward in Amazon's broader strategy to capture incremental share in the category.”
The firm noted that Amazon is capable of meeting logistical challenges that many grocers typically rely on third parties like Instacart to address.
“Following the announcement, we think Prime has become an even more compelling subscription for grocery shoppers, diminishing the appeal of Instacart,” the analysts wrote.
At the same time, Instacart’s share of the grocery delivery market has slipped. “The company's market share relative to Uber, DoorDash, and others has fallen to 58% in 2024 from 70% two years prior,” Wedbush wrote, adding that major retail partners could increasingly direct online grocery demand to their own first-party platforms.
Wedbush also flagged concerns about Instacart’s long-term outlook. “We are increasingly cautious on management’s ability to achieve its longer-term targets as competitive pressures build,” they wrote.
The analysts anticipate that more customers will direct orders to competitors, resulting in only low to mid-single-digit annual GTV growth for Instacart in the later years of the forecast.
It added that the company may need to spend more on incentives, sales and marketing to attract and retain customers.
As a result, Wedbush reduced its estimates for the business. The firm now expects fourth quarter GTV and adjusted EBITDA to come in about 1% and 2% below consensus, respectively.
For 2026, Wedbush projects GTV growth of 7.1% year-over-year, down 200 basis points from its prior forecast, and adjusted EBITDA of $1.2 billion, or a 29.5% margin, about 3% lower than its earlier view.
“Following these revisions, we lower our price target to $42 from $55 previously,” Wedbush said.
Shares of Instacart traded down 2.6% at $44 on Thursday afternoon.