Instacart (CART) stock began trading Tuesday, opening at $42 per share on Nasdaq.
The grocery delivery app had priced its IPO at $30 per share, valuing it at around $10 billion.
Instacart’s IPO follows Arm (ARM)’s return to the public markets less than a week ago. After the chip designer’s IPO was initially well received by investors, with the stock rising more than 20% in the first trading session, shares are now down more than 8% since on the day of the IPO.
Instacart increased its IPO price range following Arm’s strong trading, sparking discussion about whether these public offerings could reinvigorate what has been a dormant market over the past year. last year. In 2021, 1,010 IPO transactions were carried out by Dealogic. In 2022, this figure fell to 173.
IPO experts told Yahoo Finance that Instacart could serve as a better barometer for a return to the IPO market because of the difference between its business and Arm’s. Valued at $54.5 billion, Arm was the biggest IPO of 2023. The established chip designer, which has previously traded on public markets, says it powers 99% of high-end smartphones .
Instacart, meanwhile, will be listed on the stock exchange for the first time. Founded in 2012, Instacart’s valuation reached $39 billion in 2021 as enthusiasm for grocery delivery grew during the COVID-19 pandemic. The company connects consumers with gig economy workers who pick up their orders at grocery stores and deliver them.
However, Instacart never went public during the 2021 IPO craze. Instead, it went public on Tuesday with a valuation more than 70% below its peak.
The company believes it is in the center of a “massive digital transformation,” Instacart CEO Fidji Simo said in an S-1 filing. The grocery delivery market has not reached its full potential. According to the filing, only 12% of grocery sales are made online.
“As more people shop online, online penetration could double or more over time,” Simo said.
Instacart believes that advertising sales can be part of its next stage of growth rather than just direct sales to customers. The company reported revenue of $1.48 billion in the first half of 2023, up 31% from the same period a year earlier. Advertising represented 28% of these revenues.
Josh Schafer is a reporter for Yahoo Finance.
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