• From the Wall Street Journal:
“Instacart’s shares jumped in their trading debut, another promising sign for a reawakening IPO market.
“Shares of the grocery-delivery company finished their first day of trading at $33.70 on Tuesday on the Nasdaq exchange under the ticker CART, up 12% from the IPO price of $30 a share.
“Instacart’s initial public offering had been in the works for years, and Chief Executive Fidji Simo said in an interview that the company’s main goal with the offering is to provide liquidity to its employees. Instacart already has been operating like a public company, she said, and following the IPO it will continue to look for acquisition targets and other ways to build its retail support technology.
“‘We will continue to deepen and expand all of the services that we launched with grocers,’ Simo said.
“At its closing price, Instacart commanded a valuation of more than $11 billion on a fully diluted basis.”
• The Journal also wrote:
“When Instacart’s stock starts trading Tuesday, employees will be among those watching the price closely.
“One big reason: There’s a provision in the company’s regulatory filing to go public that says if the stock trades at more than 120% of its IPO price for at least five of 10 consecutive trading days – one of which must come after the company’s first quarterly earnings announcement – employees can sell stock. Otherwise, they must wait the full, and more typical, 180 days.
“The move illustrates how as companies wait longer until they go public, the desire – and need – to appease employees has grown. It’s particularly important for tech companies, which often compensate employees to a large degree with stock options.
“Lockups are agreements with underwriters that prevent a company’s early shareholders and employees from selling their stock immediately after its IPO. Companies and their bankers are typically wary of allowing early selling by insiders because it could flood the market with shares and put pressure on the stock in its early days of trading.”
• From the New York Times:
“Instacart’s path has not been easy. Founded in 2012 as a service that connected customers at home with contract workers who shopped and delivered their groceries, it has faced scrutiny — along with other gig companies like Uber and DoorDash — over whether its contractors should be treated as employees and whether they are fairly compensated.
“Customers flocked to Instacart’s app during the early days of pandemic lockdowns, but its growth plunged in mid-2021 as people returned to grocery stores, prompting questions about the long-term sustainability of the business.
Apoorva Mehta, Instacart’s co-founder and chief executive, stepped down that summer and Ms. Simo, a former Meta executive, took over. Under Ms. Simo, Instacart has increasingly focused on advertising and grocery software businesses, which has helped the company make money.”
The Times gos on:
“As part of its I.P.O., Instacart sold shares to investors before its formal ‘road show’ pitches. PepsiCo, one of its advertising customers, was among them, buying $175 million shares. That move ‘sent a strong signal’ to the market, Ms. Simo said.
“The investment firms Sequoia Capital and D1 Capital are among Instacart’s largest outside shareholders, with Sequoia owning a 19 percent stake and D1 Capital 14 percent. Mr. Mehta holds an 11 percent stake, now worth roughly $976 million. As to his plans for the windfall, he said, ‘That’s the billion-dollar question’.”
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