Testing the "temperature" of US tech IPOs, "American Meituan" Instacart will kick off its roadshow this week, with an estimated market value of "knee-cutting".
Instacart launched its IPO this week, proactively lowering its valuation to 1/4 of its two-year term. The market is anticipating that Instacart will trigger a wave of IPO frenzy.
The U.S. IPO market seems to have finally seen a glimmer of hope after the summer.
This week, Instacart, a grocery delivery company, will kick off the IPO process, becoming one of the first private tech companies to test the IPO waters.
The market expects that Instacart's listing will trigger a wave of IPOs and thaw the long-frozen market. According to the Financial Times, investors in Instacart believe that after the successful listing of the company, tech startups such as Databricks and Socure may also go public. However, it is foreseeable that the valuations of these companies will be much lower than the valuations paid by venture capitalists during the industry boom of 2020-2022.
In the first half of this year, Instacart achieved its first profit since its inception, with a net profit of $224 million, compared to a net loss of $74 million in the same period last year.
However, considering the challenging market environment, the company has proactively lowered its valuation. The current target valuation is approximately $8.6 billion to $9.3 billion, only a quarter of the $39 billion valuation two years ago. Venture capitalists who bought shares at a high price will be forced to acknowledge their true losses after Instacart goes public.
If even profitable companies are facing such challenges, the situation for loss-making tech stocks is bound to be even more difficult.
In addition to Instacart, this week, British chip design company Arm will also debut on the Nasdaq, with an expected valuation of up to $52 billion, making it the largest IPO project this year.
However, many venture capitalists believe that compared to Arm, Instacart is a better gauge of the temperature of the U.S. IPO market. Because Arm is a large, profitable company, while Instacart represents the majority of startups supported by venture capital.
Kyle Stanford, Chief Analyst at private market data company PitchBook, said:
"Instacart will be a good indicator of what public market investors are looking for. If Instacart performs poorly, it will close the door for venture-backed startup IPOs. If it does well, there may be several companies following suit."