instacart: Instacart soars 40% as it begins trading, an encouraging sign for tech IPOs

Shares of the grocery delivery company Instacart opened for trading Tuesday at $42, up 40% from their initial public offering price of $30. The performance signaled that investors are eager to take a chance on young tech companies – but only at the right price.

Instacart’s market capitalization, including all outstanding shares, totaled $13.9 billion. But even with the stock price pop, the company’s valuation remained a far cry from the $39 billion that investors assigned it in the private market in 2021. It was a painful loss to investors who had bought in at that peak, sending a harsh reality check to other start-ups that raised money at inflated valuations.

Elevate Your Tech Prowess with High-Value Skill Courses

Offering College Course Website
Northwestern University Kellogg Post Graduate Certificate in Digital Marketing Visit
Indian School of Business ISB Digital Marketing and Analytics Visit
Northwestern University Kellogg Post Graduate Certificate in Product Management Visit
IIM Lucknow IIML Executive Programme in Data Science Visit

Fidji Simo, Instacart’s CEO, said the valuation reflects the changes in public stock prices, even as the company has improved its performance in the last two years, including by turning a profit.

“The markets will always ebb and flow,” she said, adding that she was more focused on what she could control.

The tech and finance industries had eagerly anticipated new IPOs in hopes they would usher in more listings. Inflation and rising interest rates, alongside a broader downturn marked by layoffs and other cuts, deepened investor skepticism of tech companies, leading to a virtual freeze in IPOs for the past two years.

Just 144 companies went public in the United States in that time, raising $22.5 billion, down from 397 IPOs that raised $142 billion in 2021, according to Renaissance Capital, which tracks new listings.

Discover the stories of your interest

Things began changing last week when Arm, a chip designer owned by SoftBank, went public. Its stock was priced at the top of its proposed range and jumped 25% on the first day of trading. Many hoped Arm’s IPO would encourage more investors to pour money into tech again. A backlog of companies are eager to tap the public market. More than 1,400 private startups, together worth more than $4.9 trillion, could be candidates, according to EquityZen, a marketplace for private stock. Among them are social media company Reddit, ticketing startup SeatGeek and car rental company Turo.

Klaviyo, a marketing software startup, is also set to go public this week. Investors valued the company at $9.5 billion when it was privately held.

Stay on top of technology and startup news that matters. Subscribe to our daily newsletter for the latest and must-read tech news, delivered straight to your inbox.