DoorDash Should Buy Instacart Now

Instacart’s stock price performance so far brings to mind a variation on the old line about love: Is it better to have gone public and lost, or never to have gone public at all? The shares fell 9% on Monday to $26.96, 10% below its IPO price, following our scoop that the Wall Street analysts at the banks underwriting the offering are projecting a severe slowdown in Instacart’s growth in the second half of this year. Instacart seems to be on track to become a zombie stock like Lyft, likely to trade below its IPO price for the foreseeable future.

Here’s a crazy idea: Perhaps this is the moment for someone to swoop in and buy Instacart. Candidates could include companies in different parts of food delivery—such as DoorDash or Uber—that want to strengthen their presence in grocery delivery. Or perhaps a private equity firm might be interested. After all, Instacart is solidly profitable, generating $253 million in free cash flow in 2022 on revenue of $2.5 billion. Instacart’s grocery-delivery network would complement what DoorDash or Uber are doing in food delivery, presumably saving them money in various areas. They’d probably be able to offer a higher price than a private equity firm lacking an existing business that offers synergies.