Shares of grocery delivery company Instacart (NASDAQ:CART) closed 12.3% higher on its stock market debut on September 19. CART stock jumped as high as 40% in initial trading on the Nasdaq stock exchange yesterday. The closing price of $33.70 is marginally higher than the initial public offering (IPO) price of $30, which was set on Monday.
Instacart’s closing price reflected a valuation of $9.3 billion on shares outstanding or $11.2 billion on a fully diluted basis. The IPO raised $660 million for the company while floating just 8% of Instacart’s stock. A group of high-profile investors were expected to buy roughly $400 million worth of shares in the listing. This would give the company a relatively smaller free float of just $260 million, which is in line with the company’s plan of avoiding excessive dilution.
Commenting on the same in a CNBC interview, CEO Fidji Simo said that the IPO was not about raising capital, as the company already has $2 billion in idle cash. She added that the intention of the IPO was to provide liquidity to the company’s employees and co-founders, who have worked very hard to bring the company to its current glory.
However, Instacart’s current valuation is far below the 2021 value of $39 billion when private investors such as Sequoia Capital, Andreessen Horowitz, and Fidelity invested in the company.
More on Instacart’s Trading Debut
Following CART’s listing, Simo told the Financial Times “There is no doubt that the markets have adjusted pretty dramatically since 2021, however, what I am focused on is that… we are a much stronger company now.”
Instacart is the second most awaited IPO this year, following the successful debut of British chip designer Arm Holdings (NASDAQ:ARM). Arm stock surged 25% in its stock market debut on September 14, although it lost much of the gains subsequently.
Investors now await the IPO of marketing automation company Klaviyo, which set the initial listing price of its shares at $30, higher than its expected range of between $27 and $29. The drought in the IPO market seems to be reversing with a series of successful public listings this year. Investors are optimistic about start-ups and IPOs as the stock markets show positive momentum this year.
