Instarcart, an American retail company that operates a grocery delivery and pick-up service in the United States and Canada is reportedly trimming jobs in a bid to cut operational costs ahead of its IPO.
As reported by The Information, Instacart’s job cuts started about two months ago after its mid-year performance reviews. The staff retrenchment of its more than 3,000 employees was noted to affect the majority of its lower-level staff and a few senior-level employees. According to the report, non of its top executives were fired, however, co-founder and Chairman, Apoorva Mehta is set to leave the company once the IPO is completed.
Besides the general economic turmoil rocking global economies, Instarcart has received a significant hit on its valuation in the past year. With the dwindling valuation, the company wants to maintain some financial strength ahead of its public listing, and as such, noted the necessity of cutting jobs as a way to cut costs.
The report also highlighted that the cost-cutting measures will also extend to the company’s regular team meetings, most of which are now being scrapped. Travels are also being tamed as best as possible.
The job cuts from the Instarcart model are a similar move that has been made by the likes of Coinbase Global Inc (NASDAQ: COIN), as well as other exchanges, fintech firms, and general tech startups. Cutting down employee count is seen as the very first approach to trimming expenses, and in this season of massive uncertainty, this has been the go-to strategy for most Wall Street firms.
It is currently unclear by how many percentages Instarcart hopes to cut costs or when it hopes to end the retrenchment. One thing that is sure is that it is exploring the best avenue to exhibit a balanced book when its IPO is finally launched.
Instarcart to Embrace Traditional IPO
When Instarcart revealed that it has confidentially filed its application to go public back in May, its original intention was to do so via a direct listing. The direct listing approach does not involve issuing new shares but allows existing investors to sell their shares, generally at a higher valuation.
Coinbase, Spotify Technology SA (NYSE: SPOT), and Palantir Technologies Inc (NYSE: PLTR) are amongst those that have explored the direct listing route to date. However, when the average annual return of Directly listed stocks and those that explored traditional IPOs are analyzed, there is almost certainly no difference, invalidating the argument posed by proponents of the former.
Instarcart’s IPO will be amongst the biggest in recent times, even though the report says the firm does not plan to raise excessive funds through the IPO. Despite its $39 billion valuation when it raised $265 million in March last year, Instarcart’s valuation is now pegged at $24 billion following the current market onslaught.
For the IPO, Instarcart will be permitting its employees to offload their stocks and will be targeting a $30 billion valuation.
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