Grocery Delivery Company Instacart Explores Sale, Stock Price Rises
Grocery delivery company Instacart is evaluating potential sale options and has had preliminary discussions with DoorDash and Uber.
Instacart (ticker symbol CART, legal entity Maplebear) has hired investment banks to assist in evaluating options. Bloomberg cites informed sources stating that the company recently reached out to Uber, but Uber has exited the negotiations, and the two parties are no longer in discussions. The Information previously reported that the company is also in early talks with DoorDash, which may not lead to a deal.
Following the news, Instacart's stock rose as much as 9.2% on Friday to $56.44, with a market capitalization of approximately $12 billion. During the same period, Uber's stock fell about 3%, and DoorDash dropped over 4%. Based on recent tech company acquisitions at a 30% to 40% premium, the potential deal is estimated to be valued at around $16 billion to $17 billion.
The company faces increasing competition. Uber and DoorDash are continuously expanding their grocery delivery services, while Instacart's revenue growth is expected to slow to about 11% in 2024 and 2025, compared to DoorDash's growth of 28% last year. In the second quarter, Instacart's revenue grew 14% year-over-year to about $1 billion, with free cash flow reaching $480 million.
In 2021, DoorDash explored acquiring Instacart at a valuation between $40 billion and $50 billion, while the company's private equity valuation was around $39 billion at that time; negotiations fell through due to antitrust concerns. The company's valuation at its 2023 IPO was significantly lower than its pandemic peak.
In terms of market mechanisms, potential buyers can quickly gain Instacart's established relationships with retailers and market share through acquisition, accelerating grocery delivery expansion. Event-driven capital flows into target companies, driving their stock prices up, while buyers' stock prices are pressured by integration costs and antitrust risks. Beneficiaries include large delivery platforms seeking economies of scale, while independent mid-sized platforms and potential merger entities facing stricter regulatory scrutiny are under pressure.
Source: Public Information
ABAB AI Insight
Instacart was founded in 2012, with its valuation peaking at around $39 billion during the pandemic. In 2021, DoorDash considered acquiring Instacart for between $40 billion and $50 billion, but negotiations were shelved due to regulatory concerns. The company went public in 2023 at a significant discount, and since then, its revenue growth has consistently lagged behind the grocery expansion pace of DoorDash and Uber.
In terms of capital strategy, Instacart is proactively reaching out to strategic buyers rather than pursuing independent growth, assessing sale options through investment banks, and attempting to package its retailer network and advertising capabilities (Carrot Ads) for platforms with existing delivery networks. DoorDash and Uber's motivation is to fill their grocery gaps at prices below historical peaks, reduce self-building costs, and simultaneously increase advertising and delivery density.
This is similar to the early integration paths of Groupon and Grubhub in the local services sector: when growth slows for a single platform and giants begin to penetrate across categories, independent players are more inclined to be acquired rather than continue burning cash in competition. The current grocery delivery sector is in a consolidation phase, with Amazon, retailer-owned apps, and large delivery platforms simultaneously squeezing independent space.
Essentially, this is a combination of industry chain restructuring and capital concentration. The fixed costs of delivery networks and the exclusivity of retail relationships make it difficult for mid-sized platforms to maintain independent pricing power; when growth slows, shareholders are more inclined to exit through a sale rather than continue bearing competitive losses. Regulation is the only clear structural resistance, having historically blocked similar transactions from completion.
ABAB News · Cognitive Laws
When growth slows, selling is more valuable than independence
Network density determines pricing power, scale determines survival
Premiums come from buyer gaps, not from sellers' historical peaks