Everything you need to know about Instacart’s IPO
- Instacart is expected to start an IPO on the Nasdaq in September.
- The company has a booming advertising business and posted net profits for five consecutive quarters.
- The goal is to merge the online and in-store shopping worlds over time to create a seamless shopping experience.
About a year ago, Instacart decided to postpone its IPO. But it’s about time the company finally made the leap onto the public trading floor on Nasdaq.
Instacart will launch the ticker symbol “CART” on Nasdaq next month. The popular grocery delivery company is touting sales of $2.5 billion in 2022 and is currently available in over 5,500 stores across the US and Canada. It will be interesting to see how Instacart fares in the stock market like other giants of the gig economy Above (ABOVE), lyft (LYFT), Airbnb (ABNB) and DoorDash (DASH) all had rocky roads post-IPO.
PepsiCo (PEP) will support the IPO and acquire $175 million worth of Instacart stock.
How does Instacart make money?
Like most gig economy companies, Instacart makes money by facilitating delivery service from order to delivery.
With over 7 million monthly active orders, Instacart also has a strong in-app advertising presence. Advertising and other revenue was reported at $406 million for the first half of 2023, up 24% year over year. The company does far more than just provide groceries from an order-to-delivery revenue perspective, as it posted five straight profitable quarters and also posted great growth numbers.
As you can imagine, the company is using AI to improve the customer experience with Ask Instacart, a tool that answers questions a customer might have about grocery shopping as well.
Why is Instacart going public?
Most companies go public to inject growth capital in exchange for company shares. In the case of Instacart, which is hugely boosting ad revenue and paving the way for the use of AI in the grocery store, the more exposure and usage the business gets, the better.
With increasing app usage, more jobs are created. Therefore, if Instacart can get the job done and expand to more stores across the US, Canada, and beyond, it’s a win-win. Instacart stands out from its competitors Amazon (AMZN), Walmart (WBA) and Google (GOOGL) as an independent food delivery company. In other words, it’s not just a small branch of a larger company with different goals and benchmarks to achieve. This independence could prove to be a differentiator if the company remains flexible and innovative.
How can I trade Instacart?
Once Instacart goes public, presumably under the ticker symbol “CART,” people will be able to publicly trade the company like any other product on the Nasdaq. For the first few weeks, you can buy and sell shares at your own discretion. When trading demand is high, the options market opens.
See here how you can trade with delicioustrade.
Once the options market is open, the world is your oyster as many more trading strategies are open. Whether monthly or weekly expirations are offered immediately usually depends on stock market activity, but most new IPO option markets tend to have high implied volatility when the stock price first moves.
Mike Butler, deliciouslive, Director of Market Intelligence, has been active in the markets and in retail for a decade. He appears on Options Trading Concepts Live and airs Monday through Friday. @tradermikeyb
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