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Will Instacart be acquired by Uber Eats?

Analyst suggests company could be a target for Uber Eats

Mark Hamstra

January 18, 2024

2 Min Read
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Instacart, which went public at $42 per share last September, has seen its stock languish ever since, falling to a new low below $23 earlier this month before rebounding back up to about $27 on Wednesday.Instacart

Shares of grocery delivery platform Instacart jumped about 11% this week after an analyst speculated that the company could be an acquisition target for Uber Eats.

Instacart, which went public at $42 per share last September, has seen its stock languish ever since, falling to a new low below $23 earlier this month before rebounding back up to about $27 on Wednesday.

Deepak Mathivanan, an analyst at Wolfe Research, this week upgraded Instacart to an “outperform” rating and said the company could be a takeover target for Uber Technologies, parent of Uber Eats, according to reports. He noted that investors are concerned about Instacart’s sales growth potential, but he believes the company is “not a broken business” as the share price implies.

Wolfe raised its price target for the stock to $35 per share. Instacart currently has a market capitalization of about $7.2 billion.

A spokesperson for Instacart declined to comment on the speculation of an acquisition, and Uber could not be reached for comment. Wolfe Research also could not be reached for comment.

In its third-quarter earnings release in November — its first since going public — Instacart posted a loss of about $2 billion, primarily related to its IPO, but said that adjusted EBITDA more than doubled vs. the year-ago third quarter, to $163 million. Revenues for the quarter were up 14.4%, to $764 million, vs. the prior-year period.

Related:Instacart pilots ads on its AI-powered smart carts

Instacart’s IPO has been closely watched among investors as one of the few new stock offerings to hit the market last year.

Uber, the ride-hailing service founded in 2009, launched the Uber Eats app in 2015, primarily focused on the delivery of restaurant meals. It launched grocery delivery in July of 2020, during the height of the COVID pandemic, and added several features, such as live tracking of orders and enhanced support for shoppers, in 2022.

An eMarketer report last year estimated Instacart’s share of the U.S. third-party grocery delivery market at 73%, followed by DoorDash at 10.9%, and Uber Eats at 7.2%. It also competes with self-distributing online grocery services such as Amazon, Walmart, Target, Kroger, and others.

 

About the Author

Mark Hamstra

Mark Hamstra is a freelance business writer with experience covering a range of topics and industries, including food and mass retailing, the restaurant industry, direct/mobile marketing, and technology. Before becoming a freelance business journalist, Mark spent 13 years at Supermarket News, most recently as Content Director, where he was involved in all areas of editorial planning and production for print and online. Earlier in his career he also worked as a reporter and editor at other business publications, including Financial Technology, Direct Marketing News, Nation’s Restaurant News and Drug Store News.

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