Instacart Shares Fall Following Revised Earnings Forecast

Instacart’s stock took a sharp dive, falling more than 14% by mid-morning on Wednesday after the company released its Q3 earnings report on Tuesday. Despite beating analyst expectations, the company issued a disappointing Q4 earnings forecast, which led to investor concerns.

For Q3, Instacart reported earnings of $0.42 per share on $852 million in revenue, surpassing analysts’ consensus of $0.22 per share and $844.24 million in revenue, according to EarningsWhispers.com. The company’s Gross Transaction Value (GTV) grew by 11% year-over-year to $8.3 billion, while its order volume of 72.9 million was up 10% from the previous year.

However, the Q4 forecast was less optimistic. Instacart projected an adjusted EBITDA between $230 million and $240 million, which fell short of analysts’ expectations of $243 million. The company also estimated Q4 GTV would range from $8.5 billion to $8.65 billion, reflecting a year-over-year growth of 8% to 10%, even after a strong holiday season last year.

Instacart attributed part of the uncertainty to challenges, including a cybersecurity breach at Ahold Delhaize on Nov. 8, which impacted Stop & Shop and Hannaford stores, disrupting deliveries and preventing pharmacies from processing payments.

Despite the concerns for Q4, Instacart CEO Fidji Simo remained positive about the company’s long-term strategy. She highlighted Instacart’s leadership in small basket fill-ups and large weekly baskets, which together account for 75% of online grocery orders. Simo also emphasized Instacart’s focus on building customer loyalty by enhancing its integrations with retailers, including solutions like EBT SNAP, pickup, alcohol delivery, loyalty integration, and enterprise solutions like Storefront Pro.

Additionally, Instacart noted the growing adoption of its Caper Carts, an AI-powered smart-cart technology, which was recently rolled out in several independent grocery stores.