Instacart's valuation leaps above $14 bln as stock pops 43% in debut

Instacart employee Eric Cohn, 34, navigates a Safeway grocery store while preparing a delivery order while wearing a respirator mask to help protect himself and slow the spread of the coronavirus disease (COVID-19) in Tucson, Arizona, U.S., April 4, 2020. REUTERS/Cheney Orr/File Photo Acquire Licensing Rights

Sept 19 (Reuters) - Instacart's shares soared as much as 43% in their Nasdaq bow on Tuesday, giving the grocery delivery app a valuation of more than $14 billion days after SoftBank's Arm Holdings debuted on Wall Street with a bang.

The IPO of Maplebear Inc., the parent of San Francisco-based Instacart, was priced at the top end of its $28 to $30 price range, raising a total of $660 million in proceeds, of which $237 million will go to investors who sold their shares in the offering.

The IPO gave Instacart a valuation of nearly $9.9 billion, a fraction of the $39 billion it was worth in 2021, the company's last funding round.

The stock was last up about 27% from its IPO price at $38.12 after hitting an earlier high of $42.95.

Several startups have seen their valuations shrink since 2022 as inflation, geopolitical tensions and the Federal Reserve's rapid rate hikes soured the economic climate.

Instacart's strong debut, along with those of chip designer Arm and RayzeBio (RYZB.O) last week, could encourage other startups to test the waters and potentially revive the IPO market after a near 18-month dry spell, albeit at lower valuations than during the exuberance of 2020 and 2021.

"One of the biggest headwinds to getting companies to come out was the founders coming around to the fact that they needed to get these things valued to reality and not to their last equity raise," said Art Hogan, chief market strategist at B. Riley Wealth

A lukewarm reception to Neumora Therapeutics' (NMRA.O) IPO last week hinted at limited investor enthusiasm for new listings.

Arm soared in its first day of trading but has dropped every day since then. Last down 4.7% on Tuesday, Arm has now declined over 8% from the closing price on its first day of trading, and remains about 8% above its $51 IPO price.

The 10 biggest U.S. IPOs of the past four years were down an average of 47% from the closing price on their first day of trading, a recent analysis of LSEG data showed.

Instacart is debuting almost three years after kicking off preparations for going public, with the company's long slog to Nasdaq featuring some key moments.

Its core business turned profitable in 2022, and that trend has continued in the first six months of 2023, the company disclosed in its regulatory filing last month.

In 2021, its co-founder Apoorva Mehta stepped down after seven years at the helm and named Fidji Simo, the former head of Meta's (META.O) Facebook app, its CEO.

Goldman Sachs and J.P. Morgan are the lead underwriters for Instacart's IPO.