Instacart cuts valuation by 40%; squeezed by tech selloff, heated delivery wars
Reuters
Published Mar 25, 2022 02:53AM ET
Updated Mar 25, 2022 06:15PM ET
By Akanksha Khushi and Krystal Hu
(Reuters) -Instacart Inc on late Thursday cut its valuation by nearly 40% to about $24 billion due to recent market turbulence, in an unusual move that shows how public market volatility affects high-flying private companies.The new valuation marks a substantial drop from last March, when the grocery delivery firm was valued at $39 billion in a $265 million funding round from existing investors including Andreessen Horowitz and Sequoia Capital, as the coronavirus pandemic was raging and doorstep delivery boomed. The latest valuation was not decided by investors but a fair market value study performed by an independent firm, according to a source familiar with the matter, who declined to be identified because the information was not public.
Instacart has not raised any outside capital at the current valuation, the source added.
Several public companies in the delivery space, including DoorDash Inc, have seen their shares plummet in the past three months amid a broader tech selloff, and as investors worry about growth potential. "We are not immune to the market turbulence that has impacted leading technology companies - both public and private," said an Instacart spokesperson. The company said the updated valuation would help it attract and retain talent in a tight U.S. labor market by aligning new equity awards, effectively issuing more shares to employees at a lower price. Instacart will still have to take on amped up competition. Retail giant Walmart (NYSE:WMT) Inc beefed up its grocery deliveries and DoorDash is grabbing a bigger share of the delivery market. It recently decided to buy European rival Wolt for $8 billion.But the competition has also taken a toll on the market value of DoorDash and Uber Technologies (NYSE:UBER) Inc. DoorDash is down 23% and Uber has shed nearly 17%. Smaller rival Buyk filed for bankruptcy protection and Fridge No More shut down its operations. Reuters reported last year that Instacart is considering going public through a direct listing, concerned that it could leave money on the table through a traditional initial public offering. Instacart's decision to cut its valuation was first reported by Bloomberg News.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.