Instacart announces $500 million buyout, third since its debut

(Bloomberg) — Instacart announced a new $500 million stock buyback program, the third round of buybacks the grocery delivery company has authorized since September in an effort to boost confidence in its growth potential .

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The board approved the buyout plan on June 2, according to a regulatory filing released Thursday. Instacart had finalized its two previous authorizations for $1 billion in repurchases, the equivalent of about 34 million shares, or more than 10% of those outstanding, the company said.

“Our business is performing well and we remain focused on strengthening our lead as the largest online grocery marketplace,” Chief Financial Officer Emily Reuter said in a statement. Reuter said the company had about $1.7 billion in cash and equivalents at the end of the first quarter, “which allows us to continue to invest in growth while repurchasing shares.”

Instacart shares rose 9% to close at $33.78.

Instacart, which trades under Maplebear Inc., had fallen below its $30 IPO price in September for months before several stock rating upgrades and a broader market rally helped send shares higher . The stock closed at $30.95 on Wednesday and has surged 32% this year.

Analysts have become more confident in the stock’s trajectory after the company reported flat results in the most recent quarter, with some increasing their price targets. The stock has 14 Buys, 11 Holds, and a Sell rating.

JPMorgan Chase & Co. analysts wrote in a March note that Instacart’s stock buyback program helps “reduce volatility” in its shares and “adds stability” now that the lock-up period the IPO has passed.

“Beyond the near-term numbers, we believe investors and competitors more appreciate the complexity of large-basket online grocery ordering, and we consider CART’s technology, retailer partnerships and experience as key competitive advantages,” JPMorgan analysts wrote. , directed by Doug Anmuth.

–With help from Ryan Vlastelica.

(Adds closing stock price in fourth paragraph.)

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