Instacart Inc slashed its valuation by nearly 40% to about $24 billion (€21.8 billion) due to recent market turbulence, underscoring the difficulties US grocery delivery firms are facing as competition heats up.
In March last year, when the coronavirus pandemic was raging and doorstep delivery boomed, Instacart was valued at $39 billion (€35.4 billion), doubling its valuation in less than six months. Rival Gopuff recorded a 69% jump in valuation to around $15 billion (€13.6 billion) in July.
But the reversal in fortunes for Instacart, whose investors include Andreessen Horowitz and Sequoia Capital, comes as retail giant Walmart Inc beefed up its grocery deliveries and DoorDash Inc ratcheted up its push for a bigger share of the delivery business.
However, the competition has also taken its toll on the market value of DoorDash and Uber Technologies Inc amid a broader decline in technology stocks in the recent months.
It tanked 23% for DoorDash, which has been rapidly expanding and had recently decided to buy European rival Wolt for $8 billion (€7.3 billion).
Uber has shed nearly 17% while smaller rival Buyk filed for bankruptcy protection and Fridge No More shut down its operations.
"We are not immune to the market turbulence that has impacted leading technology companies - both public and private," said an Instacart spokesperson.
The company said the updated valuation would help it attract and retain talent in a tight US labour market by aligning new equity awards.
Reuters reported last year that Instacart is considering going public through a direct listing, concerned that it could leave money on the table through a traditional initial public offering.
The decision to slash valuation was first reported by Bloomberg News.