Instacart's share price rose as much as 19% on Friday following a quarterly update that assuaged investor concerns about intensifying competition in digital grocery. In morning trading the stock reached $39.60, positioning the company for its most robust single-day performance since its 2023 market debut.
For the fourth quarter, the company reported gross transaction value (GTV) of $9.85 billion, a 14% increase from the same period a year earlier. Executives attributed the improvement to efforts to refine product selection, raise quality standards and maintain affordability for price-sensitive customers.
Management emphasized that sustaining double-digit growth in grocery - a sector contested by large-scale rivals - is notable. An analyst at MoffettNathanson Research noted that maintaining such momentum in the fiercely competitive grocery category, where players like Walmart, DoorDash and Uber Eats are active, is not trivial.
In response to competitive pressure in the low-ticket segment, Instacart lowered the minimum order value for its Instacart+ loyalty service to $10 last year to better capture smaller baskets. At the same time, company leaders said they continue to win larger orders above $75, which they estimate account for roughly three-quarters of the U.S. digital grocery market.
Against this backdrop, Instacart provided first-quarter guidance calling for GTV in a range of $10.13 billion to $10.28 billion, a forecast that sits above Wall Street's consensus.
The company’s forward price-to-earnings multiple is 14.44, a valuation metric the company compared with a 45.71 multiple for DoorDash. The update also included a promotional-style question about UBER valuation, referencing a fair-value tool as a way to assess UBER alongside other stocks.
Investors reacted favorably to the combination of stronger-than-expected GTV growth, an optimistic near-term outlook and initiatives designed to defend both smaller and larger basket segments of the market.
Implications for markets: The results and guidance have immediate relevance for retail and delivery platform investors, with potential knock-on effects for consumer discretionary and e-commerce segments that track digital grocery dynamics.