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Instacart stock holds onto gains ahead of first close after IPO

Instacart (CART) shares maintain gains of over 20% ahead of the closing bell on its IPO date. The stock initially premiered at $42, jumping 40% from its initial share price of $30. Yahoo Finance Live's Akiko Fujita and Josh Lipton analyze Instacart's performance in its first trading session and what this past week's fresh listings have signaled for the IPO market.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

BROOKE DIPALMA: Instacart officially making its public debut on this Tuesday afternoon. The company which filed at the NASDAQ under the ticker CART, trading in at $42 a share. That's higher than the anticipated $30 a share that Wall Street expected on Tuesday evening.

But this is a pretty big deal for the Street. This is the first venture-backed tech IPO since 2021. And also got a big haircut from that private valuation that we saw back in 2021 of $39 billion.

The company now coming in at nearly $10 billion valuations-- nearly 70% less than where we saw the company at two years ago. But one expert telling me that the company is getting valued in this current 2023 environment. It's not necessarily looking back at 2021 valuation and where it was set to go public there. They also noted that DoorDash, of course, one of its competitors there has come down significantly.

And that Instacart is being valued against DoorDash as of today and not necessarily where DoorDash even was two years ago today at that height of the COVID-19 pandemic, where so many were flocking to grocery and restaurant delivery companies.

But near-term, experts expect that the demand will be there. Largely people looking to buy in on Instacart, they expect that near-term growth will pop nearly 10% to 15% in the coming days. They also noted that some of these companies like Instacart, like Arm, which we saw go recently public have had such a heightened demand that investors will certainly be interested in.

And another expert that I spoke to is that we're seeing more and more companies get the green light to go public. Of course, Klaviyo expected to make its public debut on Wednesday.

We also heard from retailer Birkenstock, which recently filed their S-1 to go public. One expert telling me that that's expected around mid-October. And so as we ramp up into the end of 2023, Instacart making its public debut. Klaviyo, anticipated to make its public debut on Wednesday. There's lots of excitement around the IPO market.