What happened?
Shares of online grocery delivery platform Instacart (NASDAQ: CART) jumped 9.4% in the afternoon session after The Wall Street Journal reported that DoorDash is in advanced talks to acquire the company, and a deal could be completed as soon as this week.
According to the Journal, people familiar with the matter said the discussions are advanced and could be finished this week if they do not fall apart. The Journal also said Instacart is no longer in active talks with Uber. That is further along than Friday’s report in The Information, which said Instacart had hired a bank, held preliminary talks with DoorDash and Uber, and that the Uber conversations had faded. The shares had been lower for most of Monday and turned higher after the Journal report. DoorDash shares fell.
The shares closed the day at $60.91, up 8.4% from the previous close.
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What is the market telling us
Instacart’s shares are quite volatile and have had 18 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 21 days ago when the stock gained 3.7% on the news that Wells Fargo raised its price target to $56 from $54 while maintaining its existing rating. According to Streetinsider, the update to Wells Fargo analyst Ken Gawrelski, whose higher target implied a modestly more constructive view of the company’s earnings and operating outlook. Separately, Raymond James analyst Josh Beck reaffirmed an Outperform rating on Instacart and maintained a $55 price target, according to StreetInsider. Together, the two updates reinforced the view that Wall Street remains constructive on Instacart’s ability to execute amid a competitive grocery-delivery market, with the higher Wells Fargo target providing an incremental positive catalyst for the stock.
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