We will be giving some macro economic market updates on a weekly basis. No equity recommendations will be given in this commentary, and we encourage you to contact us if you have questions regarding any observations.
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This weeks issue: IPO market, New stock issuance, Instacart IPO, Arm Holdings IPO, Dry IPO market, Valuation collapse, Private equity, Inflation, CPI ticks up, Energy prices, Oil price, Inflationary waves, Central Banks, Mortgage crisis, Mortgage rates, Canada’s housing market, Real estate in the GTA, GEN Z, Faze Holdings, Ponzi schemes, Americas enemies, North Korea and Russia, Russia and China, India, BRICS, Apple revenue, Apple P/E, Apple growth, iPhone 15, Apple’s products, Apple acquisitions.
Instacart, time to check out
Instacart is an American delivery company that operates grocery delivery and pick-up services in the U.S. in Canada. The company was founded 11 years ago and is headquartered in San Francisco. We bring this company up because it has been a highly anticipated IPO for quite some time. The rumors have been swirling for a few years now that the private company would launch its IPO, and yet today, it remains private. The service allows customers to order groceries from participating retailers with the shopping being done by a personal shopper. The services of the platform are offered via mobile app and website. The company reported $2.55 billion in revenue last year and earned a slim profit of $97 million. Instacart has a deep history of losses and joins the likes of Uber, and other technology companies who have struggled to consistently turn a profit.
We bring Instacart up this week because they finally filed for an IPO this week. The company is targeting a $616 million listing, valuing the company between $7.4 billion and $9.3 billion. The company could potentially debut publicly as soon as next week. When the company begins trading, its ticker will be “CART”. The issue with Instacart’s filings is that the valuation they are targeting is a fraction of what they used to be worth. In March 2021, Instacart was valued at $39 billion, becoming the 2nd most valuable U.S. based unicorn company. Instacart only trailed SpaceX in valuation currently for U.S. unicorns. The $30 billion drop in valuation was due to slowing growth, profitability issues, COVID-19 ending, and scalability concerns. Another driver for the valuation reset was venture capital funding drying up.
Instacart’s valuation benefited during the first year of Covid-19 when consumers rushed to download the application due to lockdowns, and virus fears. The valuation grew from approximately $8 billion to $39 billion in just over a year. Instacart raised $265 million in March 2021 based on a $39 billion valuation. Some of the largest venture capital firms in the world bought their hype and piled in including Andreessen Horowitz, Sequoia, Fidelity, and D1 Capital.