Instacart Surges 9% on Report of Sale Talks With Uber, DoorDash
By @sharedot · · 6 pages
- Stock Market
- Instacart
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- Uber
- Doordash
Instacart shares jumped 9.2% after a report said the grocery-tech company is exploring a sale, with early talks held with Uber and DoorDash.
What happened: a late-day surge on sale talks
Instacart shares surged 9.2% just before the end of trading Friday to close at $56.44, after The Information reported that the grocery-technology company is in talks to sell itself and has held preliminary conversations with Uber Technologies and DoorDash.
Bloomberg, relayed by The Spokesman-Review, reported that Instacart has been working with an investment bank to evaluate its options, citing unnamed people familiar with the matter. The talks are described as early and ongoing, and may not result in a deal.
Why it's a reversal: from $39B darling to ~$13B target
The surprise is how far Instacart has fallen from its pandemic peak while still drawing buyer interest.
AOL reports the company was valued at $39 billion in a 2021 private funding round, but by its 2023 IPO the valuation had tumbled to roughly $10 billion, and its market value now stands at about $12 billion to $13 billion.
Revenue growth slowed from 19% in 2023 to 11% in each of the following two years, and its advertising expansion has yet to close the growth gap with Uber and DoorDash.
Even so, AOL notes shares have gained roughly 70% since the IPO, and the company generated $480 million in free cash flow in the second quarter, with revenue up 14% to just over $1 billion.
The evidence: a bank hired, a price tag sketched
According to The Information, as relayed by both outlets, Instacart is being advised by an investment bank as it assesses its options, and the discussions with Uber and DoorDash are preliminary.
AOL reports that a takeover could fetch roughly $16 billion to $17 billion if a buyer pays a 30% to 40% premium, an estimate based on recent public tech deals.
The report also outlines a long history between the parties: DoorDash previously held talks to acquire Instacart in 2021 at a valuation of $40 billion to $50 billion, discussions that broke down partly over antitrust concerns.
Instacart struck a 2024 deal with Uber to offer Uber Eats-powered restaurant delivery through its grocery app, and Uber began using Instacart's Carrot Ads technology last year.
The stakes: antitrust ghosts and crowded balance sheets
Both suitors have been aggressively expanding in grocery delivery, which is exactly why any deal could face antitrust scrutiny.
Uber's recent dealmaking — roughly $15 billion agreed for Delivery Hero and more than $2 billion for ezCater this year, per AOL — could complicate a bid, and DoorDash, valued at about $80 billion, already acquired Deliveroo, SevenRooms and Wolt.
No agreement has been reached and a sale remains uncertain, with Instacart declining to comment. With Amazon also expanding grocery delivery through Whole Foods, the consolidation battle is only intensifying.