Investment Case Update: May 9, 2025

Market Capitalization: $12.0B
Enterprise Value: $10.6B
Price:$45.73 (5/7/25)

What the Company Does

Maplebear, which conducts business as Instacart, provides online grocery shopping and delivery. The company currently has more than 1,800 business partnerships with grocers, including 24 of the top 25 grocers in North America, allowing it to reach over 98% of households in this region. Instacart’s platform allows its end consumers to shop at any of its retail grocer partners’ stores while offering customization options for delivery (same-day, next-day, priority, no rush, and pickup) with eventual fulfillment completed by one of the company’s 600K available “shoppers” (think “courier”). The company generates revenue via transaction fees on these online grocery orders and advertisements/promotions for various consumer packaged good brands sold at its retail partners’ stores.

Why We Own It

CART offers compelling growth prospects as only ~13% of the $1.3T North America grocery market occurs online, lagging ecommerce penetration rates (i.e. what % of sales occur online) of other major retail categories, while management thinks it can potentially reach 35% over the long term. Although most sell-side analysts believe the company will lose market share to competitors like Doordash and Uber Eats, CART continues to dominate large-basket ($75+ order value) orders with a >70% market share, while management noted that they remain the small-basket (<$75 order value) category leader and are about 5x better at converting small-basket customers to large basket orders than other platforms. Instacart’s focus on larger orders (average order value of ~$114 in 2024) is a key source of differentiation from peers who focus more on “convenience” orders, as CART is able to generate higher gross profit per order by allocating its fixed costs over a larger order base and the inherently longer online shopping sessions create a strong opportunity for CART’s ad business, which sports higher margins than its core grocery business.

Gross Transaction Value (GTV), or aggregate order volume on CART’s platform, is experiencing a growth resurgence, with management guiding for 2Q25 GTV growth of 9% year-over-year (Y/Y) at the midpoint, which would represent the sixth consecutive quarter of at least 9% Y/Y growth. Meanwhile, CART continues to gain operating leverage, with Adjusted EBITDA margins expanding more than 500 basis points (bps) in 2024 (to 26%), as investments in fulfillment efficiencies and scaling of the higher-margin ad business are expected to drive further margin expansion going forward as Adjusted EBITDA as a % of GTV is still well below management’s long-term target of 4.5% (vs. 2.7% in 1Q25). Despite CART’s superior unit economics, shares trade at a forward (FY25) EV/EBITDA multiple of ~10.3x, a more than 50% discount to both UBER and DASH.

How Management Allocates Capital

Management’s top priority is to invest excess cash into Research & Development (R&D) and marketing to fuel organic growth. However, with a pristine balance sheet and a net cash position of ~$1.6B, management has significant flexibility to pursue accretive mergers & acquisitions (M&A) and opportunistically tap into its $218MM of remaining share buyback authorization, while also meeting its required reinvestments into the business, even after buying back $780MM worth of shares over the last four quarters (6.5% of current market cap).