What Happened?
Shares of online grocery delivery platform Instacart (NASDAQ: CART) fell 8.7% in the afternoon session after reports revealed that rival DoorDash Inc. and supermarket giant Kroger Co. are expanding their partnership for grocery delivery starting next month, intensifying competition.
The news directly impacts Instacart as Kroger is its third-largest customer, accounting for over 10% of the company's gross transaction value. Wedbush analysts noted the move "directly challenges Instacart's position among intermediaries," adding to Wall Street's concerns about the company's ability to compete.
This development amplifies existing competitive pressures from major players like Amazon and Walmart, who have been making their own aggressive pushes into grocery delivery. In recent months, analysts have already cited heightened competition from Amazon's expanding services as a reason for concern, suggesting Instacart's market share is at risk of eroding in an increasingly crowded market.
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What Is The Market Telling Us
Instacart’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 2.7% as the company announced a partnership with Vroom Delivery to bring its Carrot Ads platform to 3,500 convenience stores across the United States.
This move aimed to expand Instacart's high-margin advertising business, a key growth area for the company. The collaboration allowed convenience retailers to use Instacart's advertising technology, opening the door for over 7,500 advertisers to reach more consumers.
This news came on the heels of a strong second quarter, where the company's revenue and gross transaction value both grew by 11%, driven by a 17% jump in order volume. The advertising division, in particular, showed robust health, with revenues hitting $255 million, a 12% year-over-year increase. Investors viewed the Vroom partnership as a strategic step to further bolster this lucrative revenue stream, deepening the company's role in the competitive retail media landscape.
Instacart is down 11.8% since the beginning of the year, and at $37.98 per share, it is trading 28.6% below its 52-week high of $53.15 from February 2025. Investors who bought $1,000 worth of Instacart’s shares at the IPO in September 2023 would now be looking at an investment worth $1,127.
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