Instacart May Delay IPO Until Late 2021

After reportedly being prepped for an initial public offering (IPO) early in 2021, Instacart may be rethinking that plan.

According to a Thursday afternoon report by The Information, company executives are worried that buyers of its stock could be worried about the company's fortunes once the pandemic is over and economies fully reopen. Because of this, the report said Instacart executives are now mulling over a late-2021 IPO.

"That will make it easier for investors to gauge how fast Instacart's business may grow following the pandemic," The Information wrote.

The publication also reported that Instacart is considering international expansion. As of now, the company operates in the U.S. and Canada. It is unclear where that expansion would take place and whether it would be organic or through acquisition.

Read: Instacart may say no to an IPO

In early March, Instacart announced the closing of a $265 million venture capital fundraise that valued the company at $39 billion. The round involved existing investors Andreessen Horowitz, Sequoia Capital, D1 Capital Partners, Fidelity Management & Research Co. LLC, and T. Rowe Price Associates Inc.

"Today's fundraising reflects the strength of Instacart's business, the growth our teams have delivered, as well as the incredible opportunity ahead. This past year ushered in a new normal for millions of people and changed the way we shop for groceries and goods," the company wrote in a blog post.

Shortly after, though, Reuters reported that the company was planning to skip the traditional IPO route and execute a direct listing. In a direct listing, a company creates no new shares and simply sells existing shares to the public. There are no underwriters involved, so it reduces cost, but the company doesn't generate any direct income from the sales of the shares. Anyone currently holding shares of the company can sell directly to the public and they receive the financial windfall, if any. There are usually no lockup agreements in this case.

Instacart has completed 17 rounds of funding, according to Crunchbase, with a total of $2.65 billion raised. It completed three fundraising rounds in 2020, including a $200 million round in October, $100 million private equity round funded solely by T. Rowe Price in July and a $225 million round in June.

Instacart, which more than doubled its workforce in 2020 to over 500,000, was valued at $17.7 billion in October when it closed its most recent round. Prior to the pandemic, its valuation was $2.5 billion.

Competitor DoorDash DASH went public on Dec. 9, pricing its shares at $102 each, and valuing the company near $60.2 billion. At the close on the first day of trading, shares were up 85%. GrubHub GRUB went public in 2014, pricing its initial shares at $26 per share and raising nearly $200 million in the offering. Its shares gained 31% on day one. 

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