The Information reports that one day after Instacart said that it would open mini-warehouses - it calls them "nano-fulfillment centers," and they seem to resemble "dark stores" - that will promise 15-minute delivery services in a number of markets, the company said that "it was cutting its valuation to $24 billion, 38% lower than the $39 billion it achieved in its last private financing in February 2021."
Instacart described the rationale behind the move as "market turbulence."
This decision came about two weeks after several of Instacart's investors had marked down the value of their stake in the company by about 18 percent.
However, The Information points out that while this is "a rare move for a private company," it also could help Instacart "reset investor expectations and allow it to pull off a public listing at a higher price amidst a sharp slowdown in growth last year."
The story notes that Instacart has "struggled to grow revenue at a similar pace to its publicly-traded rivals. Last year, Instacart grew revenue just 20% to $1.8 billion … By contrast, DoorDash grew revenue by almost 70% in the same time period."
- KC's View:
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As we reported yesterday, Instacart's CEO, Fidji Simo, has described the company as going through a "broader pivot" from its core business "into becoming a platform offered to retailers, incorporating advertising technology, warehouse logistics and data analytics."
I continue to believe that client retailers ought to be worried about the pivots being made by Instacart, as it looks to an IPO that will be all about its own brand, not the degree to which it defends and supports the brands of its retail customers.
