Instacart's Order Growth Accelerates, But Tougher Comparisons Loom in 2025, Says Analyst

Maplebear Inc CART also known as Instacart reported worse-than expected fourth-quarter revenue. The following are the analysts comments on the company’s performance.

Needham analyst Bernie McTernan reiterated a Buy rating on the shares and maintained the price forecast of $56.00.

Order growth for CART picked up pace for the second straight quarter, reaching +10.6% in fourth-quarter, partly driven by continued increases in order frequency, which seems to be a growing positive factor for the company, noted the analyst.

The acceleration in the second half was also supported by the UBER partnership launched in May. For first-quarter, the analyst expects a slight acceleration in order growth, marking a third consecutive quarter, aided by the introduction of a $10 minimum for free delivery for Instacart+ members, down from the previous $35 threshold.

As leap year comparisons become easier, the analyst predicts further growth in second-quarter, continuing the trend of order growth acceleration, before anticipating a slowdown in the second half of 2025 due to tougher year-over-year comparisons.

With GTV surpassing expectations but adjusted EBITDA guidance falling below consensus for first-quarter, the analyst anticipates that investors will concentrate on the take rate and the investments required to boost GTV.

Seasonal trends in the take rate were somewhat obscured last year due to an increase in the transaction revenue take rate, which rose sequentially from fourth-quarter FY23 to first-quarter FY24 but is not expected to see similar growth this year.

Regarding advertising, the analyst expects a decline in seasonality from fourth-quarter to first-quarter, modeling it to follow a similar rate as last year.

The analyst projects advertising to grow faster than GTV for the remainder of 2025, although this would suggest a flat investment rate year-over-year.

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The analyst believes there is a clear path to faster order growth through the first half of 2025, though the investments required to fuel this growth will likely attract greater investor attention.

Benchmark analyst Mark Zgutowicz reiterated a Hold rating on the shares.

CART’s fourth-quarter results and outlook seem to confirm the analyst’s concerns that the recent surge in supply-driven growth, fueled by discounts and promotions, won’t ultimately benefit the company as expected.

The company faces growing competition in convenience, particularly from emerging players like DASH and Uber Eats, who have larger network scales, along with increasing discounts from mass merchants in the ship-to-home sector, said the analyst.

Moreover, given that CART serves as an additional sales channel for grocers, its move to match in-store prices without providing a significant volume boost may discourage grocers from fully embracing a Marketplace for extra revenue.

The analyst anticipates that this will lead to challenging transaction take-rate comparisons over the next 12 months, forecasting a decline of approximately 10 basis points year-over-year in 2025.

Furthermore, for the two-thirds of CART's supply not aligned with in-store price parity, it may become more vulnerable to macroeconomic fluctuations. Regarding advertising revenue, the analyst expects limited expansion in the take rate due to already high penetration among major brand partners.

Price Action: CART shares are trading lower by 10.66% at $43.58 at last check Wednesday.

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