Key Notes
- DoorDash reportedly held preliminary talks to buy Instacart, with no agreed price or transaction announced.
- Instacart’s advertising and retail technology would add businesses beyond grocery delivery fees.
- DASH and CART investors face different questions about a potential premium, funding and regulatory review.
DoorDash Inc. (NASDAQ: DASH) held preliminary talks to buy Instacart (NASDAQ: CART), The Information reported.
The potential combination would bring together two competitors in online grocery delivery, putting the strategic value of Instacart’s retailer relationships alongside questions about acquisition costs and competition. No agreed transaction, purchase price or financing package has been announced.
The report has already produced a split market reaction. Instacart shares rallied on the prospect of a sale, while DoorDash declined, highlighting the different calculations facing shareholders of a potential target and buyer.
CART Rallies as DASH Investors Weigh the Cost
Instacart gained as much as 9.2% to $56.44 on Friday, October 23, while DoorDash fell 3.5%, Bloomberg reported. Those figures describe Friday’s reaction and should not be read as Monday’s trading returns.
Bloomberg also reported, citing a person familiar with the matter, that Uber Technologies (NYSE: UBER) had walked away from its own discussions with Instacart. Uber’s earlier involvement therefore does not establish an active bidding contest between the two delivery groups.
For CART holders, an eventual offer could provide a premium, but there is no contractual payout to value yet. For DASH investors, the questions would include how much DoorDash pays, whether it uses cash, borrowing or shares, and how quickly the acquired business contributes to earnings.
A rising target share price can reflect expectations about those possibilities before any terms exist. Equally, a prospective buyer’s decline does not establish that a transaction will destroy value; that assessment depends on the price and what the combined business ultimately earns.
Instacart Brings Advertising and Retail Technology
Instacart, whose registered corporate name is Maplebear Inc., offers more than a grocery-ordering app. Its enterprise platform supplies retailers with ecommerce, fulfillment and in-store technology, alongside an advertising business.
Its second-quarter results showed revenue of $1.043 billion, up 14% from a year earlier. Advertising and other revenue rose 16% to $297 million, contributing roughly 28% of the total.
Net income was $111 million, while free cash flow, a non-GAAP measure, reached $480 million. The company repurchased $325 million of shares during the quarter.
That combination gives shareholders a standalone business to assess alongside a potential sale. A bid would need to be considered against the earnings, cash generation and buybacks available if Instacart remains independent.
For a buyer, retailer software and advertising offer potential revenue beyond delivery fees. Their value would depend on retaining commercial relationships and keeping the technology useful to retailers after a change of ownership.
DoorDash Is Already Expanding Beyond Restaurants
DoorDash’s own quarterly update showed revenue rising 36% to $4.454 billion and orders increasing 27% to 970 million. Excluding Deliveroo, revenue grew 24%, illustrating the contribution of its existing acquisition strategy.
The company reported $200 million in net income, down 30%, and $914 million in adjusted EBITDA, up 40%. The divergence shows why expanding sales and improving adjusted operating performance do not necessarily translate into the same growth in bottom-line profit.
DoorDash said grocery and retail merchandise value grew strongly while unit economics improved. DashPass members placed approximately 75% of its American grocery and retail orders, underscoring how subscriptions connect its delivery categories.
Buying Instacart would consequently be an expansion of an existing business, rather than DoorDash’s first entry into groceries. The investment case would turn on whether ownership provides advantages that outweigh the cost of continuing to build those services internally.
Competition and Integration Would Shape Any Deal
A combination would also need to address the overlap between the companies. The Federal Trade Commission’s merger guidance explains that American law examines whether acquisitions may substantially lessen competition.
For a grocery-delivery combination, questions could include retailer choice, consumer fees and the ability of competing services to win orders. These are potential review issues, not a finding that regulators have opened a case or decided whether to permit a transaction.
Consolidation is already reshaping adjacent delivery markets. As we previously reported, Uber agreed to buy ezCater for $2.3 billion in cash, adding workplace meals and corporate ordering to its delivery business.
Uber’s announcement said that deal remains subject to regulatory approval and other closing conditions. It is a separate agreement and does not explain why the company reportedly left the Instacart discussions.
November Earnings Offer the Next Financial Check
DoorDash will release third-quarter results after the market closes on November 4. Instacart’s report follows after the close on November 5.
Those updates will provide a more recent view of growth, margins and cash generation. Until the companies disclose a concrete proposal, the stock-market debate rests on a reported strategic possibility, with the purchase price, funding and regulatory path still unresolved.
