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Reports indicate that Instacart, the grocery delivery company, is planning to go public with an estimated valuation ranging between $8.6 billion and $9.3 billion, as quoted on CNBC. These details are expected to be officially disclosed by the company soon, with an inside source sharing this information with Reuters. The Wall Street Journal initially reported on this valuation target.
While Instacart's valuation is subject to change as it gears up to present its IPO to potential investors, the initial figures mark a significant departure from its previous valuations. In March of the preceding year, amid a downturn in public stocks, Instacart had lowered its valuation from $39 billion to $24 billion. By late 2022, reports suggest that the valuation had decreased further, by approximately 50%.
Reviving the IPO Market
Instacart's decision to go public with a reduced valuation range comes as a notable development in the IPO landscape, which has been relatively quiet since late 2021. There have been no major venture-backed tech IPOs since December of that year. In a similar vein, Arm, the chip designer owned by Japan's SoftBank, filed its paperwork for an IPO in August.
Instacart's Pandemic Surge and Profitability Challenges
During the COVID-19 pandemic, Instacart experienced a surge in business as consumers sought to avoid crowded public places. However, as shoppers began returning to physical stores, the company faced persistent profitability challenges. Instacart's network of shoppers and drivers now spans over 14,000 cities, serving more than 80,000 grocers and other retail outlets.
Joining the Public Market
Instacart is set to join the ranks of gig economy companies like Uber, Airbnb, Lyft, and DoorDash in the public market. The company's stock is expected to be traded on the Nasdaq under the ticker symbol "CART," with Goldman Sachs leading the offering.
Another food delivery service provider – DoorDash (DASH - Free Report) – has seen its shares surging 68.3% this year. Hence, we expect Instacart shares to taste success, if it enters the market soon.
ETFs in Focus
The market debut of Instacart could pave its entry into a number of ETFs in the coming days. Investing in IPO ETFs could be a compelling way to enter the IPO business without directly investing in individual companies. IPO ETFs are funds that invest in a basket of companies that have recently gone public, providing diversified exposure to the IPO market. Plus, the stock may be included in several sector ETFs that align with the space Instacart operates in.
Below we highlight few such ETFs that should be tracked in light of Instacart likely IPO.
The underlying Renaissance IPO Index is a portfolio of newly U.S.-listed initial public offerings of companies whose unseasoned equities are under-represented in core U.S. equity indices. IPOs that meet liquidity & operational screens are included in the Index at the end of the fifth day of trading, or upon quarterly reviews, weighted by tradable float, capped at 10% & removed after two years. The fund charges 60 bps in fees.
First Trust US Equity Opportunities ETF (FPX - Free Report)
The underlying IPOX-100 U.S. Index is a modified value-weighted price index measuring the performance of the top 100 companies ranked quarterly by market capitalization in the IPOX Composite U.S. Index. The IPOX Composite U.S. Index is a rules-based value-weighted index measuring the average performance of U.S. IPOs during their first 1,000 trading days. The fund charges 60 bps in fees.
The underlying FactSet On-Demand Index consists of companies which provide on-demand platforms and services to consumers. The fund charges 58 bps in fees.
This ETF is active and does not track a benchmark. The Franklin Disruptive Commerce ETF seeks capital appreciation by investing in innovative companies benefitting from transformation in the e-commerce space. The fund charges 50 bps in fees.
iShares Virtual Work and Life Multisector ETF (IWFH - Free Report)
The underlying NYSE FactSet Global Virtual Work and Life Index measures the performance of equity securities across multiple sectors, including Information Technology, Communication Services, Consumer Discretionary, Health Care, and Consumer Staples. The fund charges 47 bps in fees.
The underlying EQM Online Retail Index utilizes a rules-based methodology to select a globally diverse group of companies with 70% or more of revenue from online and virtual sales. The fund charges 65 bps in fees.
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Instacart's IPO Plans Put These ETFs in Focus
Reports indicate that Instacart, the grocery delivery company, is planning to go public with an estimated valuation ranging between $8.6 billion and $9.3 billion, as quoted on CNBC. These details are expected to be officially disclosed by the company soon, with an inside source sharing this information with Reuters. The Wall Street Journal initially reported on this valuation target.
While Instacart's valuation is subject to change as it gears up to present its IPO to potential investors, the initial figures mark a significant departure from its previous valuations. In March of the preceding year, amid a downturn in public stocks, Instacart had lowered its valuation from $39 billion to $24 billion. By late 2022, reports suggest that the valuation had decreased further, by approximately 50%.
Reviving the IPO Market
Instacart's decision to go public with a reduced valuation range comes as a notable development in the IPO landscape, which has been relatively quiet since late 2021. There have been no major venture-backed tech IPOs since December of that year. In a similar vein, Arm, the chip designer owned by Japan's SoftBank, filed its paperwork for an IPO in August.
Instacart's Pandemic Surge and Profitability Challenges
During the COVID-19 pandemic, Instacart experienced a surge in business as consumers sought to avoid crowded public places. However, as shoppers began returning to physical stores, the company faced persistent profitability challenges. Instacart's network of shoppers and drivers now spans over 14,000 cities, serving more than 80,000 grocers and other retail outlets.
Joining the Public Market
Instacart is set to join the ranks of gig economy companies like Uber, Airbnb, Lyft, and DoorDash in the public market. The company's stock is expected to be traded on the Nasdaq under the ticker symbol "CART," with Goldman Sachs leading the offering.
Another food delivery service provider – DoorDash (DASH - Free Report) – has seen its shares surging 68.3% this year. Hence, we expect Instacart shares to taste success, if it enters the market soon.
ETFs in Focus
The market debut of Instacart could pave its entry into a number of ETFs in the coming days. Investing in IPO ETFs could be a compelling way to enter the IPO business without directly investing in individual companies. IPO ETFs are funds that invest in a basket of companies that have recently gone public, providing diversified exposure to the IPO market. Plus, the stock may be included in several sector ETFs that align with the space Instacart operates in.
Below we highlight few such ETFs that should be tracked in light of Instacart likely IPO.
Renaissance IPO ETF (IPO - Free Report)
The underlying Renaissance IPO Index is a portfolio of newly U.S.-listed initial public offerings of companies whose unseasoned equities are under-represented in core U.S. equity indices. IPOs that meet liquidity & operational screens are included in the Index at the end of the fifth day of trading, or upon quarterly reviews, weighted by tradable float, capped at 10% & removed after two years. The fund charges 60 bps in fees.
First Trust US Equity Opportunities ETF (FPX - Free Report)
The underlying IPOX-100 U.S. Index is a modified value-weighted price index measuring the performance of the top 100 companies ranked quarterly by market capitalization in the IPOX Composite U.S. Index. The IPOX Composite U.S. Index is a rules-based value-weighted index measuring the average performance of U.S. IPOs during their first 1,000 trading days. The fund charges 60 bps in fees.
ProShares On-Demand ETF (OND - Free Report)
The underlying FactSet On-Demand Index consists of companies which provide on-demand platforms and services to consumers. The fund charges 58 bps in fees.
Franklin Disruptive Commerce ETF (BUYZ - Free Report)
This ETF is active and does not track a benchmark. The Franklin Disruptive Commerce ETF seeks capital appreciation by investing in innovative companies benefitting from transformation in the e-commerce space. The fund charges 50 bps in fees.
iShares Virtual Work and Life Multisector ETF (IWFH - Free Report)
The underlying NYSE FactSet Global Virtual Work and Life Index measures the performance of equity securities across multiple sectors, including Information Technology, Communication Services, Consumer Discretionary, Health Care, and Consumer Staples. The fund charges 47 bps in fees.
Amplify Online Retail ETF (IBUY - Free Report)
The underlying EQM Online Retail Index utilizes a rules-based methodology to select a globally diverse group of companies with 70% or more of revenue from online and virtual sales. The fund charges 65 bps in fees.