Maplebear, which operates as Instacart, saw its shares fall nearly 3% on Thursday after Wedbush Securities downgraded the grocery delivery company to underperform from neutral.
The firm also cut its price target to $42 from $55, implying about 8% downside from Wednesday’s close.
The downgrade comes as Instacart’s stock has faced sustained pressure in recent months, losing more than 13% in the past six months and over 7% in the last month.
A key factor has been intensified competition, particularly from Amazon’s expansion of same-day grocery delivery services.
Amazon’s expansion fuels competitive pressures
Wedbush analyst Scott Devitt pointed to Amazon’s recent rollout of same-day delivery for fresh foods across more than 1,000 US cities and towns as a significant challenge for Instacart.
The launch earlier this month triggered an 11% decline in Instacart’s stock and, according to Devitt, has made Amazon Prime “an even more compelling subscription for grocery shoppers, diminishing the appeal of Instacart.”
Although Instacart has reported healthy growth in gross transaction value (GTV) and improving margins in recent quarters, Devitt cautioned that the competitive landscape has shifted dramatically.
“The recent expansion of Amazon’s same-day perishable grocery delivery service has intensified the competitive environment,” he wrote.
Devitt added that while Instacart may carve out a niche by offering omnichannel support for local and regional grocers with limited resources, larger players like Amazon could ultimately draw more consumers with stronger value propositions.
Market share decline raises concerns
Wedbush also flagged concerns about Instacart’s shrinking share of the grocery delivery market relative to its peers.
The company’s market share among intermediaries has dropped to roughly 58% in 2024, down from about 70% two years ago.
Competitors such as Uber and DoorDash have gained ground during this period.
There are also risks that Instacart’s major retail partners could shift more online grocery demand to their first-party platforms over time, further eroding the company’s position.
To defend its market share, Devitt warned, Instacart may need to increase spending on incentives, sales, and marketing—steps that could weigh on profitability and reduce long-term visibility.
Looking ahead, Wedbush expects only mid-single-digit to low-single-digit GTV growth on a year-over-year basis, reflecting heightened caution about Instacart’s ability to hit its long-term targets.
Analysts divided despite downgrade
Despite the downgrade, Wall Street remains divided on Instacart.
According to LSEG data, 18 of the 34 analysts covering the stock maintain a strong buy or buy rating, while the remaining 16 have a hold rating.
This split reflects both recognition of Instacart’s operational progress and lingering concerns about its ability to withstand increasing competition in the grocery delivery market.
For now, investors appear to be siding with caution. Shares fell almost 3% on Thursday following the downgrade, extending the stock’s recent downward trajectory.
The post Instacart shares fall 3% after Wedbush downgrade on rising competition appeared first on Invezz
