Instacart’s public offering imparts a pivotal message to tech unicorns: don’t wait.
The grocery delivery service is slated to debut publicly sometime next week, with a recent filing suggesting a potential valuation of up to $9.3 billion.
Of course, back in 2021, Instacart’s valuation stood at a whopping $39 billion.
Throughout the past two years, Instacart’s valuation has undergone adjustments, yet the primary takeaway for other aspiring public tech giants is the detriment of delay.
The complexities of spearheading a public entity revolve around adeptly navigating the unpredictable dynamics of markets and broader economic forces, factors outside of executive purview. Jumpstarting the process sooner can prevent sporadic sidetracking concerning potential exits.
Present-day Instacart, prepping for its public foray, is arguably in a more robust business position than when it amassed funds at a valuation quadruple its current figure about two years prior.
In this year’s first half, Instacart reported revenues approximating $1.48 billion, with gross margins at 75%. If trends hold, annual revenue is projected to grow nearly 60% from 2021’s $1.83 billion, alongside an 8 percentage point margin increase.
Yet, during 2021, Instacart capitalized on pandemic-induced shopping behavioral changes, consumers endowed with disposable income, and low-interest rates uplifting investment valuations across the board.
Fast forward two years, and we witness a return to conventional shopping habits. For instance, Instacart’s total orders in 2023’s initial half barely nudged upwards by 1% against the 2022 equivalent period, even as interest rates surged.
Generally, heightened rates correlate with diminished valuations. Recent years have been exceptional in how intensely future growth got discounted.
However, this doesn’t imply public markets are uninviting for those with slower growth trajectories. It simply imposes an added layer of accountability on management, ensuring they remain responsive to changing terrains.
Consider Instacart’s contemporaries, Airbnb (NASDAQ:ABNB) and DoorDash (NASDAQ:DASH).
Both embarked on their public journey in 2020’s twilight and experienced significant stock value spikes, only to face corrections in 2022, influenced by rising interest rates.
Airbnb’s value plummeted by 50% in 2022, while DoorDash’s stock took a heftier hit, shedding about 70% of its worth. DoorDash remains over 50% below its inaugural trading day’s closure, with Airbnb rebounding, up by approximately 5% from its initial closing. Currently, both entities have seen their stock prices surge over 70%.
Navigating Wall Street’s persistent scrutiny is now a staple for Airbnb and DoorDash as they progress into their third year. Various operational facets, from recruitment to strategy formulation, undergo transformations when businesses transition from periodic valuations by institutional investors to real-time market valuations.
Quarterly financial disclosures, often deemed an unnecessary distraction, are equally challenging as leaving stakeholders in suspense regarding potential exits.
In March 2021, at the zenith of its valuation, Instacart secured funding, shortly after Airbnb’s and DoorDash’s public introductions. By July, Fidji Simo was announced as the CEO. Simo’s installment quickly spurred speculations regarding her role in ushering Instacart into the public realm, given her prior tenure at Meta Platforms (NASDAQ:META) – previously Facebook – during its 2012 IPO.
Reflecting on Facebook’s IPO, Simo remarked to Reuters, “Facebook’s IPO was merely a fleeting moment; the subsequent value creation was the crux,” emphasizing her commitment to value delivery.
An IPO might be a defining moment for companies, but the daunting task of business operations remains unceasing. More motivation for companies to expedite the process and focus on the substantive challenges ahead.
Featured Image – Freepik
Author Kristen Moran 
