The deal and immediate market reaction
DoorDash said Thursday it will buy Instacart for about $17 billion, offering $65 a share in a mix of cash and stock. That price is an 11% bump to Instacart's close on Wednesday and roughly 26% above where Instacart finished on Oct. 22, the last session before reports of a potential sale appeared.
Investors liked it. DoorDash rose more than 6% in morning trading after the news, while Instacart hovered near unchanged. The companies said they are targeting a closing window at the end of 2027 or in early 2028, and DoorDash intends to preserve Instacart's name, enterprise technology products, and consumer app.
Why DoorDash says this makes sense
DoorDash CEO Tony Xu called grocery "one of the hardest things to get right online." He highlighted challenges such as selecting the right items and getting perishables to the doorstep without damage.
"Instacart has spent years learning to do that well for grocers, while DoorDash has built a delivery network and technology that local stores rely on every day," Xu said. "Together, we could give stores of every size more of those tools and unlock the potential of grocery delivery."
Talk of a sale picked up last week after The Information reported Instacart had explored options and spoke with potential buyers including Uber and DoorDash. By Monday, multiple outlets said DoorDash was deep in discussions to buy Instacart with a potential price tag around $17 billion, and people familiar with the talks told CNBC on Wednesday an announcement could land as soon as Thursday morning.
Smart investors stay curious about new technologies and tools that can sharpen their edge. We're hosting our first ever investor livestream on 11/17 to show you how to use ChatGPT and Claude to invest like a pro, hosted by Briefs Finance CEO Jaspreet Singh. Save your seat.
The financial snapshot DoorDash released
DoorDash paired the deal news with third-quarter results. Adjusted earnings per share were $1.06, topping the LSEG average analyst forecast of 84 cents. Revenue reached $4.62 billion, ahead of LSEG's $4.56 billion estimate.
Marketplace gross order value - which sums up how much customers spent on DoorDash - climbed by 36% from the prior year, reaching $33.9 billion and beating the $33.6 billion consensus. Total orders were 993 million, up 28% year over year.
Competitive and regulatory backdrop
Buying Instacart would deepen DoorDash's position in online grocery delivery. DoorDash started in restaurant delivery and has since added retailers including Sephora, Macy's, Staples and Anthropologie, and last year moved more aggressively into grocery with a partnership with Kroger and a slate of regional grocers. Instacart went public in 2023 after benefiting from the pandemic surge in grocery delivery, but keeping that pace has been challenging. In December, Instacart reached a $60 million settlement with the Federal Trade Commission over allegations it misled users through false advertising and used "unlawful subscription enrollment" practices.
Competition has intensified. After tapping the brakes on brick-and-mortar grocery, Amazon has shifted attention back to online ordering and is using its massive logistics footprint to accelerate deliveries of home essentials, pantry items, and perishables. Amazon and Walmart alike have widened their same day and next day delivery options, increasing competitive pressure on on-demand services including Instacart and DoorDash.
Analysts also flagged potential antitrust scrutiny given the overlap. Wedbush analysts wrote that third-party delivery platforms "remain a minority of total grocery consumption, but slicing and dicing the online market more narrowly or from a perspective of the grocers as enterprise customers can make approvals more challenging."
The bottom line: your read on the deal likely comes down to regulatory risk and whether DoorDash can translate Instacart's grocery know-how into sustained growth when the transaction closes in the late 2027 to early 2028 window.
Learning how to use AI and data thoughtfully can help investors make clearer choices. On 11/17, our CEO Jaspreet Singh goes live for our first ever investor livestream on how to use ChatGPT and Claude to invest like a pro. Register to join him.
