Instacart Lowers Q4 Guidance, Shares Drop

Instacart has lowered its fourth-quarter outlook, projecting gross transaction value (GTV) between $8.50 billion and $8.65 billion, significantly below previous estimates of $10.20 billion, signaling a potential decline in online grocery spending. This adjustment comes amid increasing competition in the online delivery sector and rising household costs that are constraining consumer spending. Despite beating analyst expectations for the third quarter with a 12% revenue increase to $852 million and a 10% year-over-year order growth, Instacart's shares fell 5% in after-hours trading following the conservative forecast. Analysts expressed surprise at the company's cautious outlook given its strong performance last holiday season. Additionally, Instacart's advertising revenue grew, reflecting successful partnerships and a shift towards becoming a broader delivery service beyond groceries. The mixed signals from strong past performance and weak future expectations have left investors concerned about the sustainability of Instacart's growth.