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The excitement of Instacart’s initial public offering has died down significantly, as, for the first time since it arrived on the NASDAQ scene, the grocery delivery app service’s share price was lower than at its debut.
On Tuesday, Instacart shares finished at $29.89, slightly below the grand opening price of $30, according to Reuters. For the full day, the company’s share price was down 1.69% as a drop in consumer confidence impacted trading on Wall Street.
Instacart’s market capitalization now stands at around $8.4 billion after starting at $10 billion.
It’s been a rather turbulent ride so far for Instacart on the stock market. After debuting at $30 a share, the price went as high as $42.95 before closing on the first day at $33.70.
From there though, Instacart almost obtained “busted” IPO status last week as its market cap plunged below $8.3 billion at times. “Busted” means the price drops below the initial offer price.
Analysts cited concerns about the company’s opportunities for growth amid stiff competition from other delivery companies and from self-delivering retailers such as FreshDirect and Amazon Fresh. In addition, investors have been bearish overall amid ongoing concerns about the economy and consumer spending, according to reporting from Reuters.
Bernie McTernan, an analyst with Needham who follows Instacart, said in a research note that he feels online grocery shopping faces “structural headwinds,” although he forecasted 12% annualized growth of grocery ecommerce over the next three years, according to reporting from Investors Observer.
“Consumers who have quality control fears or enjoy going to grocery stores do not consider time saving worth paying for,” McTernan said.
The grocery delivery app service’s near-term growth on Wall Street will be dependent on its first earnings report as a publicly traded company and Instacart’s full-year guidance, which is currently unknown.
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