Maplebear Inc. (NASDAQ:CART), operating as Instacart, saw its shares decline on Friday after research highlighted topline risks associated with rising competition in online grocery delivery.
Piper Sandler downgraded Instacart to Neutral from Overweight, lowering its price forecast to $41 from $62. The firm's updated six-year DCF assumes a 12% discount rate and 2% terminal growth.
Piper Sandler analysts led by Thomas Champion said heightened competition in the digital grocery sector puts pressure on Instacart's topline, with about 10% Gross Transaction Value (GTV) growth year-to-date.
Also Read: Maplebear (CART) Shares Fall As Competition Heats Up: What Investors Need To Know
Competitive intensity has risen with recent moves by large rivals. Amazon (NASDAQ:AMZN) announced in August it will expand same-day perishable delivery to 2,300 cities by year-end, up from 1,000 currently.
Uber (NYSE:UBER) unveiled a nationwide partnership with Aldi in September, covering 2,500 stores, while DoorDash (NASDAQ:DASH) expanded its agreement with Kroger (NYSE:KR) to 2,700 locations.
Walmart (NYSE:WMT) earlier committed to providing delivery in three hours or less to 95% of U.S. households by the end of 2025. Piper noted that Instacart shares fell about 10% on both the Uber and DoorDash announcements.
Piper estimates the U.S. grocery and adjacent categories represent a $1.2 trillion annual opportunity, with digital penetration at 15% and expected to climb to 20% by 2028. However, Walmart and Amazon hold larger shares, while Uber Eats and DoorDash are expanding faster.
Instacart, ranked No. 3 in the U.S. with digital grocery Gross Merchandise Value (GMV) of $33.46 billion in 2024, could face a squeeze in the middle.
Pricing is another concern. Piper's analysis shows that Instacart's baskets cost about 30% more than in-store, implying an average digital basket of $220 versus $170 in-store, or a $50 premium per order. This adds up to approximately $2,700 per year for regular customers.
By contrast, Walmart and Amazon offer options closer to parity with in-store pricing, which may prove more sustainable.
Instacart's web traffic declined 14% year-over-year in the third quarter, and app downloads are down 15% year-to-date.
Piper modestly cut 2025 revenue estimates to $3.71 billion from $3.73 billion and 2026 revenue to $4.05 billion from $4.11 billion. EBITDA forecasts were revised to $1.06 billion for 2025 and $1.18 billion for 2026, both of which are slightly lower.
Instacart shares now trade at ~8x next-twelve-months EV/EBITDA, compared with a prior trough of 6x.
Price Action: CART shares were trading lower by 3.69% to $37.85 at last check Friday.
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