| From: Glenn Petersen | 9/20/2023 5:43:22 AM | | | | | | Instacart closes up 12% in Nasdaq debut, after first-day rally sputters
PUBLISHED TUE, SEP 19 202312:50 PM EDT
UPDATED TUE, SEP 19 20234:09 PM EDT
Ari Levy @LEVYNEWS
CNBC.com
KEY POINTS
- Instacart is the first notable venture-backed tech company to hit the U.S. public market since December 2021.
- The grocery delivery company, once valued at $39 billion, has a fully diluted valuation of just over $11 billion at the close of its opening day.
- The stock is trading on the Nasdaq under ticker symbol “CART.”
Instacart shares rose 12% in their Nasdaq debut on Tuesday after the grocery delivery company’s long-awaited IPO.
The stock initially popped 40% to open at $42, but closed at $33.70 as investors locked in their initial gains.
The offering late Monday at $30 a share valued Instacart at about $10 billion on a fully diluted basis, down from a private market valuation of $39 billion at the height of the Covid pandemic in early 2021. At Tuesday’s close, the company is worth just over $11 billion.
Instacart is the first notable venture-backed company in the U.S. to go public since December 2021, and its performance is being closely tracked by venture firms and late-stage startups that have been waiting for investors’ risk appetite to return. The Nasdaq has rebounded this year after a dismal 2022, but companies that went public before the downturn are still trading at a steep discount to their peak prices. Software developer Klaviyo is expected to hit the market soon.
Founded in 2012, Instacart delivers groceries from chains including Kroger, Costco and Wegmans, had to drop its stock price dramatically to make it appealing for public market investors. In early 2021, with consumers stuck at home and loading up on delivery orders, Instacart raised money at $125 a share, from prominent venture firms like Sequoia Capital and Andreessen Horowitz, along with big asset managers Fidelity and T. Rowe Price.
Instacart has sacrificed growth for profitability, a move required to preserve cash and attract investor interest. Revenue increased 15% in the second quarter to $716 million, down from growth of 40% in the year-earlier period and about 600% in the early months of the pandemic. The company reduced headcount in mid-2022 and lowered costs associated with customer and shopper support.
Instacart started generating earnings in the second quarter of 2022, and in the latest quarter reported $114 million in net income, up from $8 million a year prior.
At $11.2 billion, Instacart is valued at about 3.9 times annual revenue. Food delivery provider DoorDash, which Instacart named as a competitor in its prospectus, trades at 4.1 times revenue. DoorDash’s revenue in the latest quarter grew faster, at 33%, but the company is still losing money. Uber’s stock trades for less than three times revenue. The ride-hailing company’s Uber Eats business is also named as an Instacart competitor.
The bulk of Instacart’s competition is coming from Amazonas well as big brick-and-mortar retailers, like Target and Walmart, which have their own delivery services. Target acquired Shipt in 2017 for $550 million.
Only about 8% of Instacart’s outstanding shares were floated in the offering, with 36% of those sold coming from existing shareholders.
“We felt that it was really important to give our employees liquidity,” CEO Fidji Simo told CNBC’s Deirdre Bosa in an interview. “This IPO is not about raising money for us. It’s really about making sure that all employees can have liquidity on stocks that they work very hard for. We weren’t looking for a perfect market window.”
The company said co-founders Brandon Leonardo and Maxwell Mullen are each selling 1.5 million, while Apoorva Mehta, another co-founder, is selling 700,000. Former employees, including those who were in executive roles as well as in product and engineering, are selling a combined 3.2 million shares.
For Instacart, the offering brought in over $420 million in cash, adding to the close to $2 billion in cash and equivalents the company had on its balance sheet as of the end of June.
Instacart opens on Nasdaq at $42 in IPO (cnbc.com) |
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| From: Glenn Petersen | 11/8/2023 6:56:10 AM | | | | | | US Hospitals Turn To Gig Platforms On Nurse Shortage
By Beiyi SEOW
AFB via Barronm's
November 7, 2023
Jessica Martinez, 38, works as a nurse but instead of being employed by a hospital, she picks up individual shifts as a gig workerKENA BETANCUR
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When Jessica Martinez moved away from home in 2020, a temporary contract brought her to New Jersey as a nurse on the frontlines of the pandemic. But her earnings slipped as Covid-19 faded.
Drawn by higher pay and greater flexibility, the 38-year-old is among a growing number of nurses turning to gig work -- picking up individual shifts on an app as an alternative to months-long contracts or direct employment by a hospital.
"I have worked as little as one day a week," Martinez told AFP.
"I've worked seven days a week, eight-hour shifts. It just depends on kind of what's going on in my life."
The availability of gig work comes as US hospitals try new ways to alleviate a staffing crunch, drawing comparisons to convenience associated with apps like Uber.
But critics warn this could impact patient care or fuel tensions within the workforce.
Some 100,000 registered nurses left the workplace due to stresses in the Covid-19 pandemic, found a report this year by the National Council of State Boards of Nursing.
Over 610,000 more intend to leave by 2027 due to stress, burnout or retirement, the study added.
This is a significant dent on the workforce: As of 2022, the country had around 5.2 million active registered nurses.
Some 100,000 registered nurses left the workplace due to Covid-19 stresses, according to an earlier report by the National Council of State Boards of NursingKENA BETANCUR
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There is a "staffing crisis in health care," said Deborah Visconi, chief executive of Bergen New Bridge Medical Center where Martinez works.
"Many people have decided to early-retire or to switch professions," she said.
The hospital has since started working with a platform named CareRev, and about 150 professionals have signed up to work at the center.
"Within a couple hours, we can have somebody pick up a shift right away," she said. This pool of workers fill some 80 percent of its vacancies.
Another provider of gig hiring, Aya Healthcare, told AFP it saw a 54 percent rise in the number of gig shifts filled by nurses in the last year.
Across the country the total number of available shifts on its app climbed by 62 percent, said Sophia Morris, executive vice president at Aya Healthcare.
Jessica Martinez, 38, said working as an independent contractor via a gig platform can bring higher wagesKENA BETANCUR
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Martinez finds gig work more "lucrative" than being a staff nurse at a hospital, estimating that wages can be "at least 30 percent more."
But as an independent contractor, she does not have benefits like health insurance provided by an employer and relies on her husband's insurance.
Others like Chantal Chambers turned to gig work while furthering their studies, picking up shifts as late as the night before.
When the 34-year-old worked gig shifts in San Diego through Aya Healthcare, she no longer had to stress about molding her family's plans around her work calendar.
As a mother-of-two, she said this allowed her to use her time better and choose to work when her children were at school all day.
Visconi of Bergen New Bridge Medical Center expects the use of gig platforms to rise.
Workers view their workplaces differently than before, seeking the flexibility to stay home at certain times or pick up extra work when they need more money, she said.
"We have an aging population that demands more health care services, and we are in the midst of a crisis," said Susan Pasley, chief nursing officer at CareRev. "So (hospitals are) looking for more flexible options."
But some warn that a surge in gig nurses could impact patient care.
"What this will result in is the lack of being prepared, for example, not having enough nurses present on site to respond to emergencies or influxes of patients," said Michelle Mahon of the National Nurses United union.
There could also be a lack of familiarity at work, such as not knowing the location of lifesaving equipment, she added.
Sarah DeWilde, a Missouri-based registered nurse, said some of this is already happening.
She trains gig nurses at her hospital, but said this does not necessarily allow her to assess their skills.
Visconi expects such situations to improve as credentialed gig workers tend to return to the hospital repeatedly to work.
But for now, DeWilde finds herself pulled into others' work.
"What that's doing is pulling me away from my patients to help them take care of their patients," she said.
"I'm already short-staffed, overworked, overwhelmed."
This can create issues, given that gig nurses can be making "twice as much money."
"That can cause a lot of tension," she told AFP.
The Barron's news department was not involved in the creation of the content above. This story was produced by AFP. For more information go to AFP.com.
© Agence France-Presse
US Hospitals Turn To Gig Platforms On Nurse Shortage | Barron's (barrons.com) |
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| From: Glenn Petersen | 11/8/2023 6:32:32 PM | | | | | | Instacart’s First Report Shows Strength in Online Grocery Orders- First results as public company show strong grocery orders
- Growing high-margin ads business also beat analyst estimates
By Natalie Lung
Bloomberg
November 8, 2023 at 9:12 PM UTC
Updated on November 8, 2023 at 10:08 PM UTC
Instacart reported better-than-expected earnings in the third quarter, showing modest growth in online grocery orders and assuaging some investor concerns about the health of its underlying business.
In particular, the largest grocery-delivery company in the US beat analyst expectations on two key metrics: number of orders and gross transaction value — the revenue it gets from those orders. Instacart, which is incorporated as Maplebear Inc., also gave financial guidance for the current quarter and full year slightly ahead of projections, a sign that orders will continue to grow and outpace a decline in inflation.
Shares rose 1.8% to $27.74 at 5:06 p.m. in extended trading in New York. They had declined 9.2% since trading began in September as of Wednesday’s close.
The results, Instacart’s first as a public company, show there is still appetite for the premium that comes with online grocery delivery, which has become a test for consumer budgets as shoppers have returned to stores. They also follow strong earnings from competitors DoorDash Inc. and Uber Technologies Inc. that signaled increased delivery spending in the third quarter.
“We are confident in our position, even as several macroeconomic factors work against the online grocery industry,” Chief Executive Officer Fidji Simo said in a letter to shareholders Wednesday alongside the company’s results, which included the announcement of a $500 million share buyback program.
Instacart posted adjusted earnings, minus some figures, of $163 million for the three months ended Sept. 30, citing fulfillment efficiencies and strong advertising performance. This was far ahead of the consensus view of $119.5 million. The company also anticipates an adjusted earnings of $165 million to $175 million during the fourth quarter, ahead of estimates.
The San Francisco-based company said transaction value from its longer-term users, described as those who have been on the app since before 2021, collectively declined during the quarter compared to a year ago, but that decline was more than offset by “new customer activations.”
Since going public, Instacart has pitched investors on the strength of its growing high-margin ads business, which brought in a better-than-expected $222 million revenue for the quarter. Still, it’ll have to prove that it can sustain a re-acceleration in order growth that does not make it over-reliant on advertising and enterprise offerings. The health of Instacart’s core business of pairing consumers with independent contractors to do their grocery shopping is still key to its success, and the majority of its sales.
“Advertising is going to continue to be a big driver, but it’s not the only one,” Simo said in an interview Wednesday. “You are also seeing strength in transaction revenue. And that’s driven both by order growth that’s re-accelerating but also by fulfillment efficiencies.”
Gross transaction value for the third quarter jumped 5.8% from the previous quarter to $7.49 billion, compared to the average analyst estimate of $7.42 billion. Orders grew 3.4% to 66.2 million. Instacart reported a bigger-than-expected net loss on a GAAP basis of $2 billion, primarily driven by the $2.6 billion of stock-based compensation expense from its initial public offering.
The delivery market has also become more competitive with rivals DoorDash and Uber gaining more share in smaller-ticket purchases. Both have also rolled out ads businesses, pitching themselves as data powerhouses that are able to sell targeted ads based on user behavior data on their app, and are jockeying to get consumer brands and retail stores that list their items on their apps to spend marketing dollars on their platforms.
(Updates with shares in third paragraph, CEO comment in ninth paragraph and additional details throughout)
Instacart’s First Report Shows Strength in Online Grocery Orders - Bloomberg (archive.ph) |
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| From: Glenn Petersen | 1/8/2024 2:30:01 PM | | | | | | Biden administration to unveil contractor rule set to upend gig economy
By Daniel Wiessner and David Shepardson
Reuters
January 8, 202412:43 PM CST
Updated 35 min ago
Jan 8 (Reuters) - The administration of U.S. President Joe Biden will release a final rule as soon as this week that will make it more difficult for companies to treat workers as independent contractors rather than employees that typically cost a company more, an administration official said.
The U.S. Department of Labor rule, which was first proposed in 2022 and is likely to face legal challenges, will require that workers be considered employees entitled to more benefits and legal protections than contractors when they are "economically dependent" on a company.
A range of industries will likely be affected by the rule, which will take effect later this year, but its potential impact on app-based services that rely heavily on contract workers has garnered the most attention. Shares of Uber Technologies Inc (UBER.N), Lyft Inc (LYFT.O) and DoorDash (DASH.O) all tumbled at least 10% when the draft rule was proposed in October 2022.
On Monday, shares of DoorDash were up 3.9%, Lyft rose 3.6% and Uber was up 2.2%.
The rule is among regulations with the most far-reaching impacts issued by the Labor Department office that enforces U.S. wage laws, according to Marc Freedman, vice president at the U.S. Chamber of Commerce, the largest U.S. business lobby. But he said the draft version of the rule provides little guidance to companies on where to draw the line between employees and contractors.
"Economic dependence is an elusive concept that in some cases may end up being defined by the eyes of the beholder," Freedman said.
The Labor Department in the proposed rule said it would consider factors such as a worker's "opportunity for profit or loss, investment, permanency, the degree of control by the employer over the worker, (and) whether the work is an integral part of the employer’s business."
The rule replaces a Trump administration regulation that said workers who own their own businesses or have the ability to work for competing companies, such as a driver who works for Uber and Lyft, can be treated as contractors.
The department's sharp break from the Trump-era regulation will likely be the focus of lawsuits challenging the new rule, legal experts have said. Federal law requires agencies to adequately explain their decision to withdraw and replace existing rules.
The Biden administration has said the Trump-era rule violated U.S. wage laws and was out of step with decades of federal court decisions, and worker advocates have said a more strict standard was necessary to combat the rampant misclassification of workers in some industries.
The left-leaning Economic Policy Institute in a report last year estimated that a truck driver treated as a contractor earns up to $18,000 less per year than one who is deemed an employee, while construction workers' earnings drop by nearly $17,000 and home health aides lose out on up to $9,500 in pay and benefits.
Business groups sharply criticized the draft rule after it was proposed. Any change in policy is expected to increase labor costs for many sectors including trucking, retail and manufacturing.
Most federal and state labor laws, such as those requiring a minimum wage and overtime pay, only apply to a company's employees, who studies suggest can cost companies up to 30% more than independent contractors.
Nearly 40% of U.S. workers, or more than 64 million people, did some freelance work in the past 12 months, according to a December survey by freelancing marketplace Upwork.
Reporting by Daniel Wiessner in Albany, New York and David Shepardson in Washington, D.C., Editing by Alexia Garamfalvi and Deepa Babington
Biden administration to unveil contractor rule set to upend gig economy | Reuters |
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