Instacart IPO Sets Valuation at Up To $9.3 Billion, Well Below the $39 Billion Pandemic High (barrons.com) 14
Grocery delivery app Instacart set a target valuation that was way below its prior funding round in 2021, a sign of companies treading carefully as they test investor appetite for new listings. From a report: The San-Francisco based firm said Monday it's pricing its shares between $26 and $28 per share. Instacart said it has 279 million shares outstanding as of Aug. 15. Including the stock options and the restricted stock units of 20.45 million and 31.47 million, respectively, the total stock for the purpose of valuing the company comes to 331 million shares. This makes for a valuation between $8.6 billion to $9.3 billion, far below its valuation of $39 billion set in a fundraising round in 2021. The company's internal valuation last year in March was $24 billion, and in July was reduced to $15 billion to reflect the selloff in technology stocks, a person familiar with the matter had told Barron's.
So what? (Score:5, Insightful)
The early investors and key insiders will still have a great ROI. Employees and late investors just became "long-term investors". The general public, well, nobody was expecting them to make money IPO flipping in 2023. Considering the kind of recession that we are heading for this is still a very rich valuation for a commodity business.
Re: (Score:3)
Considering the kind of recession that we are heading for this is still a very rich valuation for a commodity business.
Completely agree, though I'd say its much worse than just "rich people gonna get richer". This kind of cram-down suggests that actual Silicon Valley type pure-growth play startups might be over for a while - few if any of the true early founders will make out as big as you suggest. Not only will there be limits on how much they can trade, but these trades are SEC regulated, so they cant just tank the stock by selling it all (unless they want to get sued or jailed). And it looks like Washington DC/IRS and m
Re: (Score:2)
And it looks like Washington DC/IRS and maybe NY state regulators might change the tax treatment of "loans" against stock shares to make it income
Source? I have serious doubts that would fly... At worst it would be taxed no different than a capital gain which is a lower rate than the income rate.
Re: (Score:2)
It stands to reason that within the US, tax receipts are insufficient to cover our budget (much less our outstanding debt!!) - so the political critters are looking for easy "rich" targets. The first thing they tried in the 2017 tax law [taxfoundation.org] is now in litigation at the supreme court because it affected a retired couple over a 14% share of a foreign corporation with no actual income to distribute [forbes.com]. If the Supreme Court rules that this is in-fact unconstitutional (and it doesnt look good for the Feds), then some or
Re: (Score:2)
Still worth it? (Score:3)
Is it even possible Instacart is still worth a $9B valuation? Not can they get that from the stock market, but will the long run return on investment be there? Recall that most of the unicorns (+$1 Billion dollar startup) were pure growth plays - WeWork, Uber, DropBox, even Google was a growth play back in its time. Is it even possible to ever break-even on a growth play now with interest rates at this point and the main-street level market saturated with variations of "do business, but on a computer"?
This is not a rhetorical question or a gripe about the market, fat-cats, etc. etc - I'm curious if anyone in the first 1/3 to middle of their careers (ie: those with real coding chops and architectural ability) are willing to work for one of these startups with the expectation of a big payoff, or is it all froth concentrated in finance (banking) and new-grads who havent been through a market bust?
gig work + being and middle man in an area with sm (Score:4, Interesting)
gig work + being and middle man in an area with small profit may not work out that well.
and with states pushing to make gig work come with min wage that will drive up there costs.
Re: (Score:3)
gig work + being and middle man in an area with small profit may not work out that well.
It only worked for those who came before because they sold dimes for a nickel, using large amounts of other people's money they borrowed for almost nothing, counting on eventually driving other dime sellers out of business. At which point they simply enshitify their product and profit! It's the Underpants Gnomes, except, Step 2 isn't a question mark because they're clueless, it's a question mark because they know better than to say the quiet part (establish a monopoly) out loud, lest it one day be read ba
is it worth it? sure (Score:1)
Re:is it worth it? sure (Score:4, Interesting)
The people buying the shares at the IPO price are professional investors who ask hard questions
Only the very first round investors (ie the "market makers") get the IPO prospectus and the chance to ask questions. Everyone else is limited to public information and guessing. The bump that occurs on an IPO day is actually something investment banks hate, because it costs them money (that is they could have skimmed that bump profit) - but they try hard to only put their hand in the cookie jar enough to siphon off most of the first-day's profit, leaving just enough in the stock to get everyone else to buy in.
A bigger question is whether that bump can stay inflated long enough for ETFs to get in on the buying, if so it will take a very long time for the stock to go away, while ETFs are a "small" overall percentage of the market [ishares.com], they likely act as a prop to share prices (due to the continuing contribution effect [investopedia.com]). If any ETF or mutual fund adds Instacart to their index (I'm looking at you total-market funds) then there will be plenty of buying activity _not_ controlled by wizard level accounting experts who can discriminate between junk/garbage plays and real operating companies.
Personally I think every pure growth-strategy company is a garbage play in the long run, but institutional and individual investors can remain optimistic far longer than I can remain pessimistic and out of the market...
Re: is it worth it? sure (Score:2)
Fortunately the IPO bump seems to be a thing of the past. Most IPOs nowadays seem to drop in price almost immediately.
It's a worthless stock (Score:4, Insightful)
Re: (Score:2)