Instacart is one of the largest companies to have survived the COVID-19 chaos. As a matter of fact, the online grocery delivery app has seen immense growth in the lockdown phase. It reportedly generated around $1.5 billion in revenue in 2020.
The growth of the company has got the attention of investors and most of them are concerned about when it is going public.
There have been speculations that the company is about to go public through an IPO (Initial Public Offering). However, recent reports state that the company is looking for other options, including a direct listing.
According to recent reports, Instacart may be going public via a direct listing. The grocery delivery giant has raised $265 million in a private funding round. It has no short-term need for cash right now.
The COVID-19 pandemic has been beneficial to the company as more consumers have started shopping for groceries online. The current valuation of the company is $39 billion. Estimations have been made that the company could be valued by the stock market at more than $50 billion.
The speculations for direct listing have come after careful evaluation of the initial public offering (IPO) model. It has been mulling over the decision for IPO and right now the odds seem to be in favor of direct listing. There have been no clear reports of the dates. However, it is expected to happen within the next couple of months.
If the company approaches the direct listing method, it will be the latest company to do so. For years, the usual approach to direct listing has been through IPOs.
As per reports from data firm Dealogic, shares of newly listed U.S companies going public via IPO traded up 36.2% on average on their first day.
The trend of direct listing has been set a few years back by some of the major companies in the US. One of the pioneers of this trend is Spotify. In 2018, Spotify Technology SA went public through a direct listing.
Other major names in the list of companies opting for direct listing are Roblox Corp, Coinbase Global, UiPath Inc, and Robinhood.
The New York Stock Exchange (NYSE) now lets companies the option to raise money in a direct listing after it got approval from the U.S. Securities and Exchange Commission.