DoorDash Stock in Focus After $17 Billion Deal for Instacart

DoorDash has agreed to buy Instacart for about $17 billion, a move that would bring the largest US grocery delivery app under the same roof as the company that already handles most of America's restaurant takeout orders. The announcement has put DoorDash stock in the spotlight. The companies are both headquartered in San Francisco, and both boards have approved the agreement.

Deal terms and the companies behind it

Under the agreement, Instacart shareholders would receive $65 per share, mostly in cash. That price is 11 percent above Instacart's closing price on Wednesday, according to The New York Times.

DoorDash reported that in the third quarter it completed 993 million orders, up 28 percent from a year earlier, with customers spending nearly $34 billion. The company brought in $4.6 billion in revenue. Its market capitalization was around $72 billion, according to The New York Times.

Instacart's most recent quarterly results, for the second quarter, showed 90.3 million orders worth about $10.4 billion and revenue of just over $1 billion. Instacart, which has a market capitalization of around $14 billion, has relationships with more than 2,200 retailers.

Why the deal matters for DoorDash

The acquisition would be DoorDash's largest to date, surpassing its roughly $8 billion purchase of Finnish food-delivery company Wolt and its acquisition of the British rival Deliveroo. For DoorDash, the deal offers a faster route to scale in grocery, a category where orders tend to be larger and potentially more profitable than a single restaurant meal.

Competition in grocery delivery has intensified in recent months. Last year, DoorDash began offering full grocery delivery from nearly 2,700 Kroger-owned stores across the country, an announcement that sent Instacart's stock falling sharply. DoorDash also added Family Dollar and dozens of other grocery partners that year.

A shift for Instacart

Instacart was valued at $39 billion by private investors during the pandemic grocery boom and went public in 2023 at $30 a share. Its current valuation is a fraction of that level, and the company has faced growing pressure from larger rivals moving into its market.

Bloomberg had earlier reported that Instacart held talks about selling itself to Uber Technologies. That process did not lead to a deal, according to the reporting available, and the company later moved toward the DoorDash agreement.

Timing and what happens next

DoorDash moved its third-quarter earnings release forward by almost a week, to before the market opened on October 29, rather than November 4 as previously planned. The company did not give a reason for the change in its statement. Bloomberg reported that the timing came as talks with Instacart were advancing.

The deal is subject to the usual steps that follow such an agreement, and the companies have not yet provided a timeline for closing. Investors will be watching how the transaction affects DoorDash's share price and its position in grocery delivery. What we know so far: DoorDash has agreed to buy Instacart for $17 billion, with the deal approved by both boards.