Instacart’s stock has continued to struggle following its recent initial public offering, at least in part due to Wall Street analysts’ skepticism about the company’s near-term prospects.
(Ticker: CART) The company, formally known as Maplebear, started trading at $42 a share, after pricing its initial public offering last month at $30 a share. But the grocery delivery service’s stock price has fallen since then. On Monday, the stock extended its recent decline, dropping more than 7% to a post-IPO intraday low of $27.51.
Adding to the pressure, Gordon Haskett analyst Robert Molins highlighted Instacart’s coverage on Monday with a hold rating and $31 price target. This follows similar cautious comments from Needham analyst Bernie McTiernan and BTIG analyst Jake Fuller, who both gave the stock a “neutral” rating.
Gordon Haskett’s Molins said in a research note that he doubts the adoption of grocery delivery will continue to grow significantly as consumers become more cautious with their spending. “Our survey data shows that consumer demand for online grocery delivery has declined significantly in recent months compared to levels seen during the pandemic.” , also said that the transition to office work will cause some people to resume shopping in stores rather than ordering groceries online, which can be expensive.
Like Mr. McTiernan and Mr. Fuller, Mr. Mollins is concerned about competition, which he says has already led to Instacart losing market share in the online grocery delivery sector this year. Mollins also acknowledged the risk that Instacart customers could migrate to alternative programs.
(WMT) offers more services and better value. In particular, he concludes, there is “too much risk and not enough catalyst” to get investors excited about the company’s modest valuation discount to the broader market.
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