What Happened?
Shares of online grocery delivery platform Instacart (NASDAQ: CART) jumped 7.1% in the afternoon session after it received an analyst upgrade from BMO Capital and posted strong third-quarter results.
BMO Capital raised its rating on Instacart to "Outperform" from "Market Perform," pointing to the solid quarterly performance and an attractive valuation. The company's results showed a 10.2% increase in revenue to $939 million, and net income rose to $0.51 per share. This performance was supported by a 10% rise in gross transaction value and a 14% year-over-year increase in orders. Adding to the good news, Instacart also announced an expanded partnership with Associated Food Stores to provide e-commerce solutions for its member retailers. While most of the news was positive, one firm did lower its price target on the stock, citing concerns over future advertising growth.
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What Is The Market Telling Us
Instacart’s shares are quite volatile and have had 17 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 29 days ago when the stock gained 1.6% on the news that an analyst at Citizens maintained a 'Market Outperform' rating on the stock, bolstering investor confidence.
The firm highlighted the grocery delivery service's "double-digit U.S. DAU growth" as a positive signal for user engagement. This positive view was issued despite the analyst also noting that Instacart experienced a deceleration in its month-over-month user growth. Adding to the positive sentiment, Instacart recently announced a partnership with OpenAI. This collaboration intended to integrate the company's delivery services with ChatGPT, which aimed to simplify the grocery shopping experience for users.
Instacart is down 7.6% since the beginning of the year, and at $39.75 per share, it is trading 25.2% 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 $1,180.
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