Instacart Stock Struggles Amid Analyst Skepticism

Instacart, the popular grocery delivery service, has been facing challenges in the stock market following its recent initial public offering (IPO). Wall Street analysts have expressed skepticism about the company’s near-term prospects, contributing to the decline in its stock price.

Instacart, also known as Maplebear (ticker: CART), went public last month with an IPO price of $30 per share. However, since its debut, the stock has been steadily declining. On Monday, it dropped over 7%, reaching a new post-IPO low of $27.51.

Analyst Robert Mollins from Gordon Haskett initiated coverage of Instacart with a Hold rating and a target price of $31. This cautious outlook aligns with similar assessments from Needham analyst Bernie McTiernan and BTIG analyst Jake Fuller, both of whom assigned Neutral ratings to the stock.

Mollins points to concerns about the future growth of online grocery delivery, citing survey data that suggests consumer demand has decreased compared to the peak levels seen during the pandemic. He also anticipates a shift back to in-store grocery shopping as people return to working from offices, potentially impacting Instacart’s market share.

Competition is another factor contributing to the skepticism. Mollins highlights the risk of Instacart customers switching to alternative programs offered by Amazon.com and Walmart, which provide more services and better value.

In conclusion, Mollins believes there are too many risks and not enough catalysts to generate excitement among investors regarding Instacart’s modest valuation discount compared to the broader market.

While Instacart faces challenges in the stock market, the company continues to be a popular choice for convenient grocery delivery. It remains to be seen how the company will navigate these concerns and adapt to changing consumer preferences in the coming months.