San Francisco-based Instacart (CART:NASDAQ) became the second hefty US IPO (initial public offering) to pop on day one of trading after joining the Nasdaq market overnight. Last week saw chip architecture firm ARM (ARM:NASDAQ) leap 25% in its first day of trading (14 Sep) as investors scooped up shares, and Instacart also rallied on its market debut, closing 12% up of its $30 IPO price at $33.70.

The stock had hit intraday peaks of $42 before easing back later in the day.

The online grocery delivery app has been closely watched by industry observers and investors looking for signals of increased investor appetite after a significant IPO drought. The company is reckoned to have raised close to $700 million of growth funding after pricing its IPO at $30, valuing the business at approximately $10 billion.

IPO market warms up as Instacart joins ARM with September listing target

This is a fraction of the $39 billion it was worth in 2021 as the pandemic spurred demand for online grocery deliveries.

UPENDING THE GROCERCIES MARKET

Instacart works with grocers and retailers to allow shoppers to buy their regular groceries online and either collect them locally or have them delivered quickly. The company partners with more than 1,400 national, regional, and local retail businesses in the US, operating delivery and pick-up points from about 80,000 stores on the Instacart Marketplace.

According to Crunchbase, there are more than 1,400 unicorns (privately-owned companies valued at more than $1 billion) waiting in the wings and assessing IPOs, with an estimated value of more than $5 trillion. These include $10 billion marketing tech start-up Klaviyo, which is also expected to go public this month, and Turo, a peer-to-peer car rental service.

The successful IPOs of ARM and now Instacart will lift confidence that other private companies could pull the trigger of IPOs as 2023 closes and we enter 2024.  

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