Instacart’s Slow Growth Lesson

Next time you contemplate the much-hyped IPO of a brand-name company, ask yourself this question: Are its glory days behind it? One of the disadvantages for public investors of snapping up newly public tech firms—particularly those that have taken their time going public—is that very often they have already peaked. Take Instacart, which reported third-quarter earnings Monday morning. Revenue grew 10%, which is hardly inspiring, but it’s par for the course for the grocery-delivery firm over the past year or so.

In fact, while Instacart has reported growth as high as 15% in the two years since it went public, its average quarterly growth rate has been 10.6%. Stepping back a bit, since taking off during the pandemic, Instacart's growth has cooled sharply—from 39% in 2022, to 19% in 2023, to 10% so far this year. This is a company that’s going nowhere fast—and so is its stock price. Instacart sold shares in the IPO at $30, and the stock has lately traded around $36 to $38. And if not for Instacart’s steady share repurchases over the past couple of years, the stock price performance could have been much worse.