Banks Ran Their Safest IPO Playbooks This Year. Investors Say It Backfired.

It seemed like a surefire way to juice investor demand in a tough market: Instacart lined up a group of existing and new investors, ranging from Sequoia Capital to Norway’s sovereign wealth fund, to buy up to $400 million, or 60% of the stock it planned to sell in its September initial public offering. In the days leading up to the IPO, bankers working on it told investors they had 23 times more orders for stock than there were shares available.

And yet Instacart dropped below its IPO price just a week into its long-awaited life as a public company. As it prepares to deliver its first earnings report Wednesday afternoon, Instacart’s shares remain in a funk. Its lackluster trading performance, along with that of other newly minted public companies such as shoe company Birkenstock, has forced bankers and investors to reckon with how the set of IPOs that seemed destined to reopen the market after an 18-month freeze have instead fallen flat.