EVENT DETAILS:
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Instacart (CART) disclosed on Monday that it is setting an offer price of between $26 and $28 for its upcoming IPO. The company said it would issue 22M shares in total, 14.1M of newly issued shares from the company, and 7.9M shares from selling stockholders. Instacart (CART) will raise $594M at the midpoint of the indicated range and be valued at close to $7.8B. If our model is right this will be a very attractive valuation. There are a number of differences between CART and DASH, the most important of which is profitability!
WHAT IS INSTACART:
- Instacart was founded in 2012 with the vision of transitioning the grocery industry to the digital realm and streamlining the grocery shopping experience.
- The San Francisco, CA-based company booked $2.9 billion in revenue for the 12 months ended June 30, 2023.
- The company prioritized consumer demands, subsequently developing advanced technologies to aid retailers in addressing these demands.
- Instacart's mission is to empower retailers, irrespective of their size, to thrive in both online and brick-and-mortar environments.
- Currently, over 1,400 various national, regional, and local retail banners (80,000 doors), accounting for more than 85% of the U.S. grocery market, collaborate with Instacart.
- The company's Gross Transaction Value (GTV), an indicator of the online sales they facilitate for their partner retailers, has shown impressive growth, with a Compound Annual Growth Rate (CAGR) of 80% from 2018 to 2022. In comparison, the online grocery market grew by 50%, and offline grocery grew by just 1%.
- In 2022 alone, Instacart generated around $29 billion in GTV, establishing itself as North America's foremost grocery technology enterprise.
Minimum Wage in CA
California Fast-Food Workers Set for $20 Minimum Wage Following Agreement
Labor organizations and fast-food businesses in California have agreed on a deal, ensuring that fast-food workers get a minimum wage of $20 per hour. This change is set to be implemented in the forthcoming revision of Assembly Bill 1228.
Under the agreement, Service Employees International Union announced:
- An increase in the minimum wage for California fast-food workers by April.
- It removes a provision that might have held restaurant companies accountable for workplace violations by their franchisees, in line with the fast-food industry's demands.
- This deal is contingent upon restaurant companies retracting a referendum proposal that could have opposed the suggested legislation in the 2024 ballot. Various groups have historically used such ballot measures in California to influence legislation.
The proposed legislation also aims to:
- Establish a council for future wage increases.
- Implement workplace regulations.
Ingrid Vilorio, a union member and fast-food worker, applauded the changes. Similarly, Sean Kennedy from the National Restaurant Association stated the agreement would provide a more predictable future for restaurant owners, workers, and customers. The previous year, the California Legislature passed Assembly Bill 257, aiming to raise the restaurant workers' minimum wage to $22 per hour. However, the bill faced stiff resistance from businesses and restaurant chains, pushing it to a 2024 ballot measure. Historically, other business sectors have utilized this tactic against legislation. Notably, in 2020, ride-share and delivery services such as Uber and Instacart gained an exemption from Assembly Bill 5, thanks to Proposition 22. Similarly, oil companies collected signatures in February to challenge a legislative proposal limiting new drilling projects. Due to concerns about the referendum process benefiting select wealthy groups, Governor Gavin Newsom signed a bill on September 8 to simplify this system.
