- Instacart last week filed its plans to go public on Nasdaq, ending a long IPO drought.
- The grocery-delivery company and other late-stage startups have seen valuation cuts during the downturn.
- Mutual fund investor Fidelity increased its valuation of Instacart shares by 10% from May to July.
Instacart made waves last week as one of a handful of late-stage startups filing S-1s and announcing long-awaited plans to go public.
Now, more good news could be in store for the long-dormant IPO market and struggling tech industry: by some measures, startup valuations are once again on the rise for some late-stage companies.
Fidelity invests in startups through multiple mutual funds, including its flagship Growth Company Fund. The firm increased the valuation of its 72,310 Instacart Series H shares to $3,261,181 at the end of July, or $45.10 a pop. That's a 10% bump up from the end of May, when Fidelity valued its shares at $40.95 each.
Since startups' financials are most often private, Fidelity — which publishes monthly, semi-annual, and annual holding reports about its investments — is one indicator to estimate how well, or poorly, startups are faring.
Fidelity's July valuation comes as the startup's S-1, a document filed last week the the SEC that outlines a company's detailed financial information and plans to operate as a public company, revealed that it was profitable to the tune of $428 million in 2022 and $242 for the first six months of 2021.
A representative for Fidelity did not immediately respond to a request for comment. A representative for Instacart declined to comment.
To be sure, Fidelity's valuation of its shares of Instacart and other late-stage startups continues to suffer following a booming tech market in 2020 and 2021. The Growth Company Fund paid a whopping $125 per share when it invested in Instacart's Series I round in February 2021, although the per-share value had dropped 18% by February 2022 as startups began to suffer.
Given Fidelity currently values its Instacart Series I shares at $45.10 each — the same value as its Series H shares — the startup's share value has been slashed by nearly 64% in the last 30 months, largely during the first part of last year, and remains near record lows.
In April of this year, Instacart raised its valuation to $12 billion, after cutting its value internally four times in 2022, according to a report from The Information. Still, this was a massive drop from the $39 billion valuation the company earned in a funding round in 2021.
Other late-stage startups are similarly enjoying a slight rebound in Fidelity valuations following months of brutal downgrading. Reddit, which confidentially filed for an IPO last year alongside Instacart but has yet to move forward with an S-1, was valued at $35.47 per share by Fidelity last month. It's a slight improvement from May, when the investor valued the social-media startup at $33.71 a pop, but it's down significantly from December 2021, when Reddit shares were valued at $61.80 each.
And Discord, following two years of explosive growth and a similarly massive downgrade, also improved this month in the eyes of Fidelity. The investor valued its shares of the social media startup at $323.61 each last month, up from $292 a pop in May but down 41% from May of last year, when Fidelity valued Discord shares at $550.62 each.
Fintech giant Stripe, once one of the highest-valued private companies in history, was valued at $20.13 per share in Fidelity's latest filing, unchanged compared to May but down a staggering 50% since November 2021.
Representatives for Reddit, and Discord did not immediately respond to requests for comment. A representative for Stripe declined to comment.
