Instacart says it has voluntarily cut its valuation to ~$24B to boost recruiting and retention; Instacart was valued at $39B during its latest raise last March
Instacart Inc. is slashing its valuation by almost 40% to about $24 billion, a move it says will help the company attract talent and adapt to market conditions.
Bloomberg
Context & Ripple Effects
Instacart's $265M raise at a $39B valuation in March 2021 capped a pandemic surge that took it from $17.7B the prior October. A year later, the company is voluntarily marking itself down to ~$24B — framing the cut as a recruiting tool, since a lower internal price resets employee option strikes closer to where an IPO could actually price.
The move reads as the first step of a controlled descent: by year's end Instacart would cut again to ~$13B in October and then to ~$10B in December, while outside investors had already gone lower still — Capital Group marked it at $14.7B by July. The March cut also preceded a hiring slowdown as the IPO approached.
First-order effects
New and prospective Instacart employees get options struck near ~$24B instead of $39B, making equity grants meaningfully cheaper to exercise — the explicit recruiting rationale — while existing holders absorb a ~40% paper loss on their stakes.
Instacart publicly concedes its March 2021 mark no longer reflects market conditions, decoupling its internal valuation from the last private round price.
Second-order effects
External holders stop treating the company's number as authoritative: Capital Group and other mutual fund investors mark Instacart below the $24B internal figure within months, forcing the company into repeated quarterly resets to stay ahead of third-party marks.
The reset pairs with a hiring slowdown ahead of the IPO, shifting the retention burden from headcount growth onto repriced equity.
Third-order effects
Voluntary writedowns emerge as standard pre-IPO hygiene for late-stage companies priced in the 2021 froth — better to reset internally and repeatedly than to face a public market that prices far below the last private round.
The pattern widens the private valuation–liquidity gap: paper marks from 2021 rounds become unusable as compensation currency, pushing late-stage compensation toward cash and frequent repricing.
The trend: Pre-IPO companies that raised at 2021 peaks are using voluntary, repeated valuation cuts to bridge the gap between private paper marks and what public markets will actually pay.
Interesting article that reflects both in stock/crypto markets. No one wants stock/crypto based comp w/ an insanely high valuation. Otherwise you end up w/ situations where you join a company and the stock gets cut in half thereby losing a bunch of comp. https://www.bloomberg.com…
And so the real markdowns begin. Talent isn't stupid. They're not going to join companies with fake valuations: “Instacart hopes the move will boost recruiting and retention efforts by aligning new equity awards with the updated valuation.” https://www.bloomberg.com/...
Even at the lower $24B valuation, Instacart is grossly overvalued. It's worth maybe $15B in public markets today. Pandemic beneficiary with $1.8B in revs & only grew 21% in FY21. Notably, GMV grew triple digits in 1Q21 but then decel'ed to flat-single digits rest of the year... h…
This is incredible. Instacart is slashing its private market valuation from $39B to $24B. I've been saying late stage private companies are overvalued but didn't expect it to manifest like this. They expect a more realistic valuation will help with hiring https://www.bloomberg.co…
I don't know that this means anything significant but really I just want to emphasize that shopping for groceries digitally seems to be (at least for me) deeply frustrating and unreliable, and that's from someone who hates going to the grocery store https://twitter.com/...
Instacart statement: We are confident in the strength of our business, but we are not immune to the market turbulence that has impacted leading technology companies both public and private. We can't control the market, but we can control how we respond. 1/2
Instacart statment cont: We will be aligning new equity awards - for existing employees and new hires - to an updated company valuation that reflects the current market conditions...Markets go up and down, but we are focused on Instacart's long term opportunity." 2/2
Given what so many growth tech stocks have done since March 2021, this is probably just one of many. That being said, their particular business line seems especially brutal. https://twitter.com/...
Assuming instacart grows 20% this year that's still an 11x multiple on 2022 revenue. Which is more reasonable than 18x. But still a lot for a business growing only 20% y/y. https://twitter.com/...
New ESOP allotment strike price considerations driving private market valuation markdowns. Stock Based Compensation is not funny money that can be ignored. https://twitter.com/...