Instacart Cuts Its Valuation by 38 Percent in Nod to ‘Turbulence’

The company pairs people at home ordering groceries on its app with shoppers who work as independent contractors for the company. The contractors pick someone’s groceries and then deliver them. During the pandemic, with people stuck at home, the company’s growth skyrocketed and it raised $265 million last year, more than doubling its valuation.

But grocery stores have complained that Instacart’s fees make it hard for them to turn a profit, and the company has faced questions, along with other pandemic successes like Zoom, Peloton and DoorDash, about whether its business is sustainable when the world returns to a version of normal.

Instacart has also worked to broaden its offerings. On Wednesday, it announced several new products, including expanded advertising offerings and software analytics for grocery stores, along with a pilot program that would allow groceries to be delivered within 15 minutes by using miniature fulfillment centers.

Fidji Simo, a former Facebook executive who became Instacart’s chief executive last year, said in an interview this week that she believed she was overseeing “the third act of the company.”

But she will still have to contend with market realities. The company framed its new, lower valuation as a way to boost the value of equity awards for new and current employees, and said it had plenty of cash in the bank — more than $1 billion — and did not have to raise more anytime soon.

Article source: https://www.nytimes.com/2022/03/25/business/instacart-valuation.html