Just a few months ago, grocery delivery was an interesting but not quite explosive business, with an estimated 6.3% of grocery sales done online in 2019 by one measure.
Apparently all it took to put the industry in overdrive was a pandemic.
Instacart said on Thursday that it raised $225 million from investors, bumping the company’s valuation significantly up to $13.7 billion from $8 billion in 2018 when it raised its previous round. DST Global and General Catalyst led the round, and existing investor D1 Capital Partners participated.
At $13.7 billion, Instacart’s valuation edges slightly above the price Amazon paid for Whole Foods in 2017: $13.4 billion. At the time, investors hailed the deal as not only a way for Amazon to establish a more solid brick-and-mortar presence, but also as a way for the company to deepen its grocery-delivery offering. It cued panic among traditional grocery investors.
Fears of Amazon’s dominance in grocery delivery fizzled out. Instead, it appeared, at least in 2019, that Walmart Grocery was pulling ahead of the pack. And now amid the coronavirus, Instacart has pulled an upset—becoming the dominant player, at least based on credit-card data, in the space.
What the heck, Hertz: Perhaps you’ve already heard—shares of bankrupt car-rental company Hertz have spiked in recent days in a bizarre move largely attributed to speculative retail traders. Professional investors have been scratching their heads from the sidelines.
Adding to the strange dynamics: In the middle of bankruptcy proceedings, Hertz is trying to capitalize on the rally by selling up to $1 billion in new shares even while its restructuring threatens to wipe out the value of its equity altogether. In a court filing asking for permission to go through with the sale, Hertz said the recent upswing in its shares presented “a unique opportunity…to raise capital on terms that are far superior to any debtor-in-possession financing.”
Certainly a stock offering would be beneficial to Hertz, cutting out the pesky terms that come with loans—but it’s a far riskier move for shareholders. Unless Hertz can fully repay its debts with some extra, those shares are effectively worthless. Read more.
Anne Sraders and Lucinda Shen curated today’s Term Sheet.