Instacart, the grocery delivery start-up, said Thursday it lowered its valuation to about $24 billion from $39 billion amid poor market conditions for technology stocks.
“We are confident in the strength of our business, but we are not immune to the market turbulence that has hit leading technology companies both public and private,” the company said in a statement.
News of the adjusted valuation, a rare private company move that comes when an independent appraiser reconsiders the value of a company’s stock, was previously reported by Bloomberg. Instacart told employees about the lowered valuation earlier on Thursday, the company said.
The valuation change does offer a potential benefit: Employees could receive share-based compensation that could benefit more in the long run, assuming the market is interested in Instacart’s recovery.
The company matches people who order groceries at home through the app with shoppers who work as independent contractors for the company. The contractors get someone’s groceries and then deliver them. During the pandemic, with people trapped at home, the company’s growth skyrocketed, raising $265 million last year, more than doubling its valuation.
But supermarkets have complained that Instacart’s fees are making it difficult for them to turn a profit, and the company has faced questions, along with other pandemic successes such as Zoom, Peloton and DoorDash, about whether its business will be sustainable when the world expands. reverts to a version of normal.
Instacart has also been working to broaden its offerings. On Wednesday, it announced several new products, including a comprehensive ad offering and software analytics for supermarkets, along with a pilot program that enables grocery delivery in 15 minutes using miniature fulfillment centers.
Fidji Simo, a former Facebook executive who became Instacart’s chief executive last year, said in an interview this week that she believed she was overseeing “the company’s third act”.
But she will still have to deal with the market reality. The company instituted its new, lower valuation as a way to increase the value of stock awards for new and current employees, saying it had a lot of money in the bank — more than $1 billion — and didn’t need to raise more anytime soon. .
Instacart also argued that the declining stock fortunes were part of a larger technical trend rather than an anomaly. Other advertising and delivery companies such as Shopify, DoorDash and Meta, the parent company of Facebook, have also seen the value of their inventory fall recently.
