With stocks backsliding again this month, investors are keen for new signs of life in the initial public offerings (IPO) market. Now one long-delayed deal may be coming around the corner that could deliver the goods.

Online grocer platform Instacart is preparing to go public on the Nasdaq as soon as September, people familiar with the matter have told Bloomberg. The company may hand in a Form S-1 detailing its updated plans for an IPO with the Securities and Exchange Commission (SEC) next week, the anonymous sources said.  

The news comes after Instacart confidentially filed with the SEC last year. Leading banks Goldman Sachs and JP Morgan were reportedly ready to underwrite the deal. Market participants may hope the debut of a leading platform brand like Instacart could inject energy into a still stagnant IPO market. 

Pandemic Upgrade 

Instacart has been evolving its business since the pandemic and catalyzing new revenue streams. 

These include forays into digital media and online advertising. The platform has also expanded its catalog of stores. In February this year, the platform announced Instacart Business, aiming to serve small business owners at the local level and seize ground from Amazon and Walmart.

“I want [Instacart] to be the largest food and supplies marketplace for consumers and small businesses,” claims Chief Operations Officer (COO) Asha Sharma, who spearheaded the initiative. 

The platform has posted strong numbers in the last year. Instacart’s revenue grew more than 50% in the fourth quarter of 2022 (compared with the final three months of 2021). Its gross profits also shot up more than 80%, per an internal memo reported by the Wall Street Journal. 

Benefiting from the addition of advertising income, Instacart’s total revenue increased 39% to roughly $2.5 billion for fiscal 2022.

Too Little Too Late?

Nonetheless, some analysts have questioned the timing of the launch.  

Instacart is not a new kid on the platform economy block. The 11-year-old firm has been eyeing public markets for some time. Taking the company public has been one of the express goals of Chief Executive Officer Fidji Simo ever since he took over the helm in 2021. Back then, the company was valued at almost $40 billion, according to Pitchbook data. Its latest valuation, however, is a fraction of that figure – around $13 billion.  

Two years later, the IPO market is still struggling to get its mojo back. A mere $14 billion has been raised through IPOs on US exchanges so far this year, compared to the $241 billion generated through deals by August of 2021 IPO year.

The lowered valuation and suboptimal market conditions have Reuters’ Jennifer Saba speculating Instacarts’ delay has “spoiled the goods.” She expects its debut will likely not generate the returns it could have two years ago. 

Interested investors will need to watch for any updates and be ready to answer the door – this deal may come and go fast.

Originally posted at Wealth of Geeks.

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