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Instacart cuts valuation by 40% as race
in delivery space heats up
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[March 25, 2022]
By Akanksha Khushi
(Reuters) -Instacart Inc on Thursday
slashed its valuation by nearly 40% to about $24 billion due to recent
market turbulence, underscoring the difficulties U.S. grocery delivery
firms are facing as competition heats up. |
Instacart employee Eric Cohn, 34, delivers groceries to a residence
while wearing a respirator mask to help protect himself and slow the
spread of the coronavirus disease (COVID-19) in Tucson, Arizona, U.S.,
April 4, 2020. Picture taken April 4, 2020. REUTERS/Cheney Orr |
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In
March last year, when the coronavirus pandemic was raging and
doorstep delivery boomed, Instacart was valued at $39 billion,
doubling its valuation in less than six months. Rival Gopuff
recorded a 69% jump in valuation to around $15 billion in July.
But the reversal in fortunes for Instacart, whose investors
include Andreessen Horowitz and Sequoia Capital, comes as retail
giant Walmart Inc beefed up its grocery deliveries and DoorDash
Inc ratcheted up its push for a bigger share of the delivery
business.
However, the competition has also taken its toll on the market
value of DoorDash and Uber Technologies Inc <UBER.N> amid a
broader decline in technology stocks in the recent months.
It tanked 23% for DoorDash, which has been rapidly expanding and
had recently decided to buy European rival Wolt for $8 billion.
Uber has shed nearly 17% while smaller rival Buyk filed for
bankruptcy protection and Fridge No More shut down its
operations.
"We are not immune to the market turbulence that has impacted
leading technology companies - both public and private," said an
Instacart spokesperson.
The company said the updated valuation would help it attract and
retain talent in a tight U.S. labor market by aligning new
equity awards.
Reuters reported last year that Instacart is considering going
public through a direct listing, concerned that it could leave
money on the table through a traditional initial public
offering.
The decision to slash valuation was first reported by Bloomberg
News.
(Reporting by Akanksha Khushi and Praveen Paramasivam in
Bengaluru; Editing by Sriraj Kalluvila, Sherry Jacob-Phillips
and Arun Koyyur)
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