September is turning out to be an exciting month for the market. Just ignore the stat that September is historically the worst month for stocks. First, we have ARM’s IPO, which is expected to be the biggest tech IPO of 2023. And now, we also have confirmation that Instacart will be going public on the NASDAQ under the ticker “CART” after releasing its filings over the weekend:

• The grocery delivery platform works with over 80% of grocery stores in 5.5K cities.
• In the first half of 2023, sales grew 31% while its net income swung from a $74M loss to a $242M profit, compared to 2022.

The company is also a bellwether for gig economy companies like Uber and DoorDash — which have been unprofitable and have largely disappointed investors. The one that might change our perceptions is Instacart — which has been profitable for five straight quarters after a heavy cost-cut push in 2022.

Three years too late to go public?

While grocery delivery boomed during the pandemic, rising interest rates and a deteriorating economy had sent Instacart’s private valuation down from a peak of $39B to a reported $10B near the end of 2022. Is a 74% cut in price enough to draw investors in? That depends on how you feel about its other problems…

1/ Flat transaction volume: Instacart received a massive COVID boost — when transaction volume nearly tripled between the first and second quarter of 2020. But since then, the number has largely been flat — rising just 7% in three years.

2/ Reliance on ads: Between 2019 and 2022, Instacart’s advertising revenue grew from $67M to $740M — now making up 29% of its sales revenue. Analysts have stated that Instacart’s profitability could largely be from ads — warning that sales growth from this area could slow unless Instacart re-accelerates its transaction growth.

Competition is also ramping up in the grocery delivery biz, with Amazon, Walmart and Target all fighting for the same shoppers. Instacart has the profitability other gig economy companies lack… but with slowing growth, can it still get investors to add it to cart?

Unleash the tech IPOs: Last Friday, Shopify-backed marketing automation platform Klaviyo also filed to go public on the NYSE under the ticker “KVYO.” Date TBD.