What Happened?
Shares of online grocery delivery platform Instacart (NASDAQ: CART) jumped 1.8% in the afternoon session after the company announced a strategic partnership with e-commerce platform Vroom Delivery to expand its advertising business.
The collaboration will integrate Instacart’s "Carrot Ads" platform across Vroom's network of 3,500 convenience stores nationwide. This move allows more than 7,500 brand advertisers already using Instacart's ad ecosystem to extend their campaigns to a new network of retailers. By providing its advanced advertising technology, including sponsored product and display ads, to Vroom's partners, Instacart is significantly growing its retail media footprint. The partnership aims to empower small- and medium-sized convenience retailers by connecting them to more advertising opportunities, thereby boosting Instacart's high-margin advertising revenue stream.
After the initial pop the shares cooled down to $46.91, up 2.1% from previous close.
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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 22 days ago when the stock dropped 3.8% on the news that Wedbush downgraded the stock, citing concerns about increasing competition from Amazon.
The firm lowered its rating to 'Underperform' from 'Neutral' and slashed its price target on the stock to $42 from $55. The downgrade was driven by heightened competition from Amazon's expanding same-day perishable grocery delivery service. Wedbush's analysis suggests that as Amazon competes more closely, Instacart's market share is expected to erode over time. The firm believes consumers are increasingly gravitating towards value-driven services, making Amazon's Prime offering a more compelling option for grocery shoppers, which puts pressure on Instacart to protect its position in the market.
Instacart is up 9% since the beginning of the year, but at $46.91 per share, it is still trading 11.7% 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 $1,392.
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