Instacart Stock Is Surging But Analysts Are Mixed On It – Here’s Why

• Instacart’s total revenue in the fourth quarter came at $992 million, up 12% year-over-year and also beat analysts’ estimates of $970 million.
• Benchmark raised the firm's price target on Instacart to $55 from $53. 
• Wells Fargo lowered the firm's price target on Instacart to $43 from $47 and said that it is still ceding market share to DoorDash, Uber, and Amazon. 

Shares of Instacart jumped 14% on Friday after it reported higher fourth quarter (Q4) earnings and eased investor worries about increasing competition from the likes of Uber, Amazon eating into the grocery delivery firm’s market share. 

However, Wall Street was mixed in their response to the firm’s robust results. 

Q4 Results

Instacart’s total revenue in the fourth quarter came at $992 million, up 12% year-over-year and also beat analysts’ estimates of $970 million, according to the data from fiscal.ai. 

Its transaction revenue saw an uptick of 13% during the quarter and came in at $698 million. 

Mixed Analysts

Needham raised the firm's price target on Instacart to $55 from $50 and kept a ‘Buy’ rating on the shares. The company's continued execution provides positive data points against competition fears, the analyst told investors in a research note, as per TheFly.

Benchmark raised the firm's price target on Instacart to $55 from $53 and kept a ‘Buy’ rating on the shares and called CART’s Q4 results as "solid across the board," aside from gross margin pressure stemming from its offsite advertising revenue mix-shift. 

Instacart, which stated they are not being impacted by competition meaningfully, further stated Amazon (AMZN) indexes towards smaller "fill-in" orders and that Amazon's growth source appears more in store than share shift, the analyst noted.

However, Wells Fargo lowered the firm's price target on Instacart to $43 from $47 and kept an ‘Equal Weight’ rating on the shares. The firm views Q4/Q1 Gross Transaction Value (GTV) acceleration reflective of broader industry trends and estimates that Instacart is still ceding market share to DoorDash (DASH), Uber (UBER), and Amazon (AMZN). Wells expects a near-term rebound in shares but sees no change to long-term competition overhang.

CEO Shrugs Off Competition Fears

During the earnings call with analysts, CART’s CEO Chris Rogers, called the concerns “overblown” and said that the company monitors threats “extremely closely.”

“There is definitely a market for us here and we feel good about our points of differentiation,” he told analysts. 

How Did Stocktwits Users React?

Retail sentiment around CART trended in ‘extremely bullish’ territory amid ‘extremely high’ message volume. 

Shares in the company have risen 27% over the past year. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.
 

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