Instacart shot up high this morning after the American grocery delivery giant priced its IPO at the top of its recently raised range yesterday. For startups dying of thirst in this desert devoid of capital, Instacart could not have offered up a more satisfying glass of cool water.
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Instacart was worth $42 per share out the gate and has since moderated slightly to $39.89 per share. Still, it’s up 33% from its IPO price, which is a pretty darn good first day for any public company.
I am writing this to you backstage at Disrupt 2023 after wrapping up an Equity taping — shoutout to Kirsten and Becca for being excellent as always — so we will be brief this morning. Here’s what I am taking away from the Instacart debut:
- Strong late-stage startups can go public today and do it at a price higher than their minimum needs. Both Klaviyo and Instacart raised their IPO price ranges following Arm’s strong debut. Any upside is good in this climate, and while the companies may have done some modest sandbagging with those initial price ranges, Instacart’s performance today is enough to indicate that IPO pricing won’t be in the basement. That’s good.
- Bankers still don’t know how to price IPOs to prevent a first-day pop. Many companies have seen their IPO price spike before it quickly returns to earth. We’ll have to see how Instacart’s doing in a week, but there will be some carping about how the company was priced in its debut. Still:
- Public market investors are more bullish than many people expected. This is the positive “other side” to the last point. Instacart did not price at the top of its raised range and then lose altitude; it’s up by more than a third in its first day’s trading. That’s very encouraging for startups and unicorns that may want to go out in the next few quarters — there may be enough demand that companies can price higher than they thought they could and also see their price bump higher in early trading.
The Instacart IPO went about as well as the market could have hoped. Now it’s time to see what Klaviyo can manage.
If Arm, Instacart and Klaviyo all somehow see their shares trading at a premium to their IPO price for the next few weeks, there simply won’t be much cover left for unicorns that are unwilling or unable to go public because, well, they can. And now everyone knows it.
Klaviyo should price this evening and trade tomorrow, while Turo waits in the wings. More to come here on TC+ when it happens, but right now I have to go and prep for the next panel that’s heading to the Builders Stage. Hugs, and come say hi if you are here at Disrupt!
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