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The Instacart IPO: Add to Cart?

By:Mike Butler

Everything you need to know about the Instacart IPO

  • Instacart is set to launch an IPO on the Nasdaq in September.
  • The company has a booming advertising business, posting net profits for five straight quarters.
  • Its goal is to blend the online and in-store purchasing worlds over time for a seamless shopping experience.

About a year ago, Instacart decided to postpone its initial public offering. But the time has come for the company to finally take the leap into the public trading space on the Nasdaq.

Instacart is set to take the "CART" ticker symbol on the Nasdaq next month. The popular grocery delivery company touts a 2022 revenue of $2.5 billion and is currently available in over 5,500 stores in the United States and Canada. It will be interesting to see how Instacart fares in the stock market, as other gig-economy giants like Uber (UBER), Lyft (LYFT), Airbnb (ABNB), and DoorDash (DASH) have all had rocky post-IPO roads.

PepsiCo (PEP) is set to back the IPO and purchase $175 million in Instacart stock.

How does Instacart make money?

Like most gig-economy companies, Instacart makes money on the facilitation of the delivery service from order to delivery.

With over 7 million monthly active orders, Instacart also has a strong in-app advertising presence. It reported $406 million in advertising and other revenue for the first half of 2023, up 24% year over year. The company is doing much more than providing groceries from a revenue perspective from the order to the delivery, as it has posted five profitable quarters in a row, with big growth numbers as well.

As you might imagine, the company uses AI to enhance the customer experience with "Ask Instacart", a tool that answers questions a customer may have about grocery shopping as well.

Why is Instacart going public?

Most companies go public to inject growth capital in exchange for company shares. In the case of Instacart, which is making a killing on advertising revenue and paving the way for using AI in the grocery store, the more eyeballs and usage the company can get, the better.

With more app usage comes more job creation as well, so it's a win-win if Instacart can get the job done and expand across more stores in the United States, Canada, and beyond. Instacart sets itself apart from its competitors in Amazon (AMZN), Walmart (WBA), and Google (GOOGL) by being an independent grocery delivery company. In other words, it's not just a small arm of a larger company with other goals and benchmarks that it must hit. That independence could prove to be a differentiator if the company remains nimble and innovative.

How can I trade Instacart?

After Instacart goes public, presumably under the ticker symbol "CART," people will be able to publicly trade the company just like any other product on the Nasdaq. You will be able to buy and sell stock as you see fit for the first couple of weeks. If there is a lot of trading demand, the options market will open.

Check out how you can trade with tastytrade here.

Once the options market is open, the world is your oyster, as many more trading strategies open. Whether monthly or weekly expirations are offered right away usually depends on the stock market activity, but most fresh IPO options markets tend to have a high implied volatility associated with them as the stock price flies around for the first time.

Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb

For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.

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