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Instacart shares slumped nearly 11% of their second day of trading Wednesday, continuing a slide that began immediately after the stock hit the Nasdaq on Tuesday, and leaving it narrowly above its initial public offering price.
On Monday, Instacart sold shares in its long-awaited IPO at $30 apiece. Trading under ticker symbol CART, the stock popped 40% to open at $42, but then sold off throughout the day to shut at $33.70. By Wednesday afternoon, Instacart’s rally had fizzled further, and shares closed at $30.10.
Instacart’s offering helped reignite a sleepy IPO market, which has been mostly closed since late 2021 as corporations were affected by inflationary pressures and rising rates of interest. But Instacart’s falling share price suggests investors are still hesitant to purchase into tech corporations which can be aiming to disrupt traditional markets despite difficult economics.
The grocery delivery company joins a gaggle of gig economy corporations on the general public market, following the debut in 2020 of Airbnb and DoorDash, along with ride-hailing corporations Uber and Lyft in 2019. Of those corporations, only Airbnb has been a superb bet for investors.
Gene Munster, managing partner at Deepwater Asset Management, expressed some skepticism about Instacart in an interview with CNBC’s “Closing Bell” on Tuesday. Munster said the initial pop was “misleading” and typical of an IPO. He said investors should note that Instacart’s unit growth has been flat yr so far.
“The query investors should ask today: Do you think order growth will reaccelerate? My view on that’s I feel that it’ll improve from flat, however it’s not going to be as exciting as Uber,” Munster said, adding that his firm owns Uber shares but not Instacart.
Analysts at Needham issued a hold rating on Instacart’s stock in a Tuesday note. They said they anticipate the corporate’s growth will likely be “harder” over the subsequent three years.
“Our expectations for post-pandemic online grocery sales within the US are likely going to be below consensus, and we see structural headwinds against adoption,” the analysts wrote.
Following Instacart’s debut, marketing automation company Klaviyo hit the market Wednesday. The stock initially rose 23% to $36.75 but has lost a few of those gains.
WATCH: Deepwater’s Gene Munster is betting on Uber over Instacart