Grocery delivery app Instacart, owned by Maplebear Inc, has successfully priced its initial public offering (IPO) at the top of its indicated range, achieving a fully diluted valuation of $9.9 billion. The shares are set to start trading on NASDAQ on Tuesday. The IPO raised $660 million, with the company pricing it at $30 per share following strong investor demand.
This valuation is notably lower than the $39 billion valuation that investors assigned to Instacart during a private fundraising round in March 2021, amidst the height of the COVID-19 pandemic. Despite the pandemic-induced surge in demand for grocery delivery services tapering off, Instacart has proven its profitability. The company reported a net income of $242 million for the six months ended June 30, compared to a loss of $74 million in the same period last year.
Investors such as Norges Bank Investment Management and entities affiliated with venture capital firms TCV, Sequoia Capital, D1 Capital Partners and Valiant Capital Management have agreed to buy up to $400 million worth of shares sold in Instacart's IPO. Beverage giant PepsiCo (NASDAQ: PEP ) also agreed to purchase $175 million in preferred convertible stock.
Despite facing competition from retail giants like Amazon (NASDAQ: AMZN ), Target (NYSE: TGT ), and Walmart (NYSE: WMT ), Instacart continues to generate revenue by delivering groceries from various chains including Kroger (NYSE: KR ), Costco (NASDAQ: COST ), and Wegmans. The company has also expanded its delivery business to non-grocery goods from sellers such as beauty product retailer Sephora, convenience store 7-Eleven and pharmacy chain CVS Health (NYSE: CVS ).
The company's successful IPO is seen as another sign of the U.S. IPO market's rebound after a dry spell throughout most of this year and 2022. This follows SoftBank (TYO: 9984 ) Group Corp's chip designer Arm floating on Nasdaq last week at a $54.5 billion fully diluted valuation, which has since risen to $62 billion after three days of trading.
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