Instacart cuts its valuation for a third time to $13b

California: Instacart Inc. is slashing its valuation to about $13 billion and steering clear of a highly anticipated public stock listing until market conditions improve, according to people familiar with the matter.

The US’s largest online grocery-delivery company set a new price of $38 a share, marking the third time it has reduced the valuation this year, said the people, who asked not to be identified because the matter is private. Instacart cut its valuation in March by almost 40 per cent to $24 billion and again in July to $15 billion.

The new valuation was announced internally at a recurring employee meeting on Thursday where executives cited volatile market conditions as the reason for the revision. Leaders also reiterated the company’s intention of going public, stressing the business fundamentals were healthy and ready for that milestone but that it was waiting for an optimal open market window, the people said.

The San Francisco-based company, founded in 2012, filed confidentially to go public in May and intends to focus its listing on selling employee shares, allowing some of its earliest hires and other staff to cash out, the people added.

A spokeswoman for Instacart declined to comment. The Information earlier reported on the devaluation.

The latest valuation represents nearly a 67 per cent drop from the $39 billion Instacart garnered in its most recent fundraising round in 2021, when it snagged $265 million from investors such as Andreessen Horowitz, Sequoia Capital and D1 Capital Partners, as well as Fidelity Management & Research Co. and T. Rowe Price Associates Inc.

The internal share price revision was part of a 409A valuation. This process is conducted by an external, independent appraiser and determines the fair market value of a company’s stock, also considered the “strike price” at which employees can buy equity in a company. Companies are expected to conduct 409A valuations at least once every 12 months, but they can be as frequent as every quarter, especially if a startup is approaching an initial public offering.