Grocery delivery platform Instacart started 2022 with a valuation of nearly $40 billion. Now, according to a report by The Information, it may close the year valued at just $10 billion.
Two people reported to be familiar with the situation told The Information that Instacart, which had been slated to launch an initial public offering this year and is now expected to go public next year, has cut its internal valuation to around $10 billion. That would represent a 20% decline off its previous valuation in October.
If the report is accurate, Instacart will have lost nearly 75% of its value since the beginning of the year. It would be the fourth time the firm has slashed its internal valuation since March.
Instacart did not immediately respond to Modern Shipper’s request for comment.
Since emerging from startup accelerator Y Combinator in 2012, Instacart has raised more than $2.5 billion from prolific investors including Sequoia Capital and Andreessen Horowitz.
With its hefty valuation entering 2022, the firm in May submitted a confidential filing with the U.S. Securities and Exchange Commission, considered a major step toward an IPO. Company executives also spent the year meeting with over 50 potential investors.
Those conversations ground to a halt in October, when the firm walked back plans to go public this year. At the time, a spokesperson told several media outlets that it would “remain focused on building for the long term” and touted the company’s recent financials, including 40% year-over-year revenue growth.
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But there are questions around whether that growth is sustainable.
Many food and grocery delivery stocks have declined precipitously since the start of the year, namely DoorDash (NYSE: DASH) and Grubhub parent Just Eat Takeaway (NYSE Arca: JUST), which owns food and grocery delivery platforms worldwide. Just Eat has declined 19%, while DoorDash has erased more than two-thirds of its value.
Privately held firms have suffered too. Gopuff, one of Instacart’s biggest competitors in the ultrafast delivery space, has been shuttering warehouses and laying off employees throughout the year. And other rapid delivery firms, like Jokr, Buyk, Fridge No More and 1520, have either shut down entirely or significantly scaled back U.S. operations.
Only Turkey’s Getir, which earlier this month bailed out troubled rival Gorillas via acquisition, and Gopuff have survived the instant delivery massacre while maintaining valuations over $12 billion. Instacart was also on that list before this week.
The downturn has prevented these firms from going public. Gopuff, for example, had also hinted at an IPO for this year.
In fact, the wider economic downturn has made 2022 one of the most challenging years in recent history for companies looking to make the transition. According to Renaissance Capital, just 71 firms have gone public on U.S. exchanges this year. For comparison, that number was 397 in 2021.
Those figures suggest that Instacart’s struggles are symptomatic of a larger issue. Analysts and stakeholders don’t expect the issue to go away — from economists to CFOs, experts agree that a recession is likely in the coming months.
Instacart will need to weather those conditions in order to stay on track for an IPO in 2023.
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