What Happened?
Shares of online grocery delivery platform Instacart (NASDAQ: CART) jumped 2.7% in the afternoon session after 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.
The shares closed the day at $42.25, up 1.8% 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 3 days ago when the stock dropped 4.7% on the news that its key competitor, Amazon, announced a new partnership with grocery chain Winn-Dixie to expand its grocery delivery service in Florida.
This collaboration focused on the Jacksonville and Orlando areas, offering customers over 16,000 items via Amazon's platform. The strategic move positions Amazon as a formidable competitor in the grocery delivery market. Investors reacted to the heightened competitive pressure, which sparked concerns about Instacart's ability to defend its market share in these key Florida regions.
Instacart is down 1.9% since the beginning of the year, and at $42.21 per share, it is trading 20.6% 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 $1,253.
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