Instacart, Inc. (CART), the online grocery delivery and pickup service provider, experienced a significant pre-market plunge of 11.21% on Wednesday, February 26, 2025, following its fourth-quarter 2024 earnings report.
The stock price drop can be attributed to several key factors:
1. Revenue Miss: Instacart's revenue for Q4 2024 came in at $883 million, narrowly missing analysts' consensus estimate of $891 million.
2. Lower Profit Guidance: The company's guidance for adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) in Q1 2025 fell short of analysts' expectations, forecasting $220 million to $230 million compared to the projected $237.3 million.
3. Increased Competition Concerns: Investors appeared to be concerned about Instacart's competitive valuation and the intensifying competition in the online grocery delivery space, as the market continues to evolve and attract more players.
Despite reporting better-than-expected earnings per share (EPS) of $0.53 for Q4 2024, surpassing analysts' consensus estimate of $0.38, and a 10% year-over-year increase in gross transaction value (GTV) to $8.65 billion, the revenue miss and lower profit guidance overshadowed these positive aspects.
Additionally, some analysts lowered their price targets on Instacart's stock following the earnings report, reflecting the potential impact of increased competition and valuation concerns on the company's future growth prospects.
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