CART - Instacart: Buy The Post-Earnings Dip

2024-05-15 13:14:41 ET

Summary

• Instacart's Q1 results disappointed investors, causing a drop in the stock price, but the company still posted admirable results with accelerating GTV and revenue.
• The company has been able to fulfill more orders and draw in more buyers by broadening availability of pickup options.
• Instacart addresses a large and underpenetrated market, has strong network effects, and has additional routes to monetization through ad revenue.
• The stock still trades at a single-digit multiple of FY25 adjusted EBITDA.

In general, earnings disappointments continue to be the rule rather than the exception in the tech sector this earnings season, and Instacart ( CART ) is no exception. The grocery fulfillment company had been on an aggressive rally year to date, until Q1 results took some of the steam out of recent optimism: despite a quarter that, on paper, blew away expectations across all metrics....

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