Instacart shares rose more than 30% on Tuesday during the grocery delivery company's first day of trading.
The stock, trading on the Nasdaq exchange, opened at $42 per share, lifting its valuation to around $14 billion. The company priced its IPO at $30 a share, the top end of its $28-$30 expected range.
That's well below the $30-plus billion valuation it gave itself in 2021. The company intended to go public last year but pulled plans to do so citing tumultuous market conditions, according to the Wall Street Journal.
Instagram Nasdaq Ticker: CART
Shares are expected to begin trading under the symbol CART Tuesday on the Nasdaq Marketsite.
The company was founded in San Francisco in 2012. It started delivering local groceries to users in the Bay Area but within two years it expanded to 10 major cities around the nation including New York and Portland. BY 2017, it expanded across North America.
Today, it competes alongside companies like Shipt and FreshDirect, which also partner with various retailers in order to deliver food to customers' doorsteps. Amazon and Walmart are larger rivals.
Despite its rivals, the company claims it is the leading grocery technology partner to over 1,400 retail banners. Those retailers, according to Instacart, account for more than 85% of the U.S. grocery market.
CEO Fidji Simo said the company powers "tens of billions of dollars in annual sales for retailers, which makes Instacart the leading grocery technology company in North America."
"We have demonstrated our ability to help our retail partners drive strong growth and stay competitive in a complex and increasingly digital industry," Simo said in a letter, which was made public in an SEC filing.
How it works
Instacart is a mobile app that lets users grocery shop directly from their phone app. It crowdsources personal shoppers who then deliver the food from stores in less than an hour, according to the company.
In 2022, the company launched a revamped version of its subscription service, Instacart+, which costs $9.99 per month or $99 per year. With this service, previously known as Instacart Express, the company touted that users can get free delivery on orders over $35, 5% credit back on all eligible pickup orders and reduced service fees. They can also share their subscription with their household.
A digital transformation is underway
In the year ending June 30, Instacart completed 263 million orders with a gross transaction value of $29.4 billion, according to an SEC filing.
The chief executive also noted that it has confidence in the company moving forward given that a "massive digital transformation is underway in the grocery industry."
"Grocery is the largest retail category and represents a $1.1 trillion industry in the United States alone. But only 12% of grocery sales are made online today," Simo wrote. Over time, thought, online penetration could even double or more.
Simo doesn't see this replacing in-store grocery shopping, but aiding a shopper's experience.
"We believe the future of grocery won’t be about choosing between shopping online and in-store. Most of us are going to do both. So we want to create a truly omni-channel experience that brings the best of the online shopping experience to physical stores, and vice versa," she added.