Instacart (CART): Bearish Signal for Potential Put Play

Instacart partners with retailers to provide technology solutions for the digital transformation of the grocery industry. Its core offerings include 'Instacart Marketplace', where consumers can shop from various retailers via Instacart's app or website, and 'Instacart Enterprise Platform', an end-to-end technology solution powering retailers' online storefronts. The 'Instacart Enterprise Platform' encompasses e-commerce, fulfillment, 'Connected Stores' technologies, ads and marketing, and insights. Instacart also offers 'Instacart Ads', enabling brands to reach customers at the point of purchase. Instacart's primary customers are retailers (over 1,800 retail banners), consumers (reaching 98% of North American households), and brands (over 7,000 active brands). The company differentiates itself by offering an integrated technology suite tailored to the grocery ecosystem, supporting various fulfillment options and shopping occasions, and providing retailers with modular solutions that can be customized to their needs.

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CART's technical outlook is decidedly bearish. The stock price has experienced a significant downtrend over the past 90 days, evidenced by the recent close at $36.48, well below both the 50-day SMA (41.17) and the 200-day SMA (43.93). The price is also below its 21-day EMA (38.70), confirming the short-term bearish momentum. Momentum indicators further support this bearish view. The RSI_14 is at 39.64, indicating oversold conditions, but there is still room for further decline. The MACD_12_26_9 is negative (-1.04), and the MACD histogram is also negative, suggesting continued downward pressure. The STOCHk_14_3_3 is at 24.63, which is low, but the downtrend is dominating. The ADX_14 is high at 31.29, indicating a strong trend, which in this case is bearish. Recent price action confirms the downtrend with lower highs and lower lows. The BBP_20_2.0_2.0 is at 0.17, indicating the price is nearing the lower Bollinger Band. Overall, the technical indicators suggest a high probability of continued downward movement in the short to medium term.

Instacart's MD&A reveals a company experiencing growth alongside some margin pressures. For the three months ended June 30, 2025, total revenue increased by 11% to '$914 million' compared to '$823 million' in 2024, driven by an 11% increase in GTV. The gross profit margin decreased from 76% to 74% over the same period, 'primarily due to cost of revenue growing faster than revenue'. For the six months ended June 30, 2025, net cash provided by operating activities was '$501 million', up from '$349 million' in the prior year. This increase was 'primarily driven by fluctuations in working capital from general business impacts'. The company highlights potential 'macroeconomic trends' that could impact future performance, including 'inflation or interest rate fluctuations' and 'uncertainty regarding an economic recession'. However, they also state that 'existing cash, cash equivalents, and marketable securities will be sufficient to satisfy our anticipated cash needs for working capital and capital expenditures for at least the next 12 months and beyond'.

Instacart's Q2 2025 earnings call projects a moderately bullish outlook. Fidji Simo stated that 'it's clear our business is firing on all cylinders,' highlighting strong user growth, higher order frequency, and improved retention. GTV grew by 11% year-over-year, driven by a 17% increase in orders, though average order value decreased by 5%. Advertising revenue also saw a 12% year-over-year increase, demonstrating the platform's resilience. Emily Maher guided for Q3 GTV to range between $9 billion and $9.15 billion, reflecting year-over-year growth of 8% to 10%, and adjusted EBITDA of $260 million to $270 million. Management noted that they 'remain well on track to achieving year-over-year growth in adjusted EBITDA,' both in absolute terms and as a percentage of GTV in 2025. While the company anticipates some moderation in order growth in Q3 due to lapping the first full quarter of restaurant contributions, they expressed confidence in their ability to drive profitable growth and strengthen their market leadership. The expansion of Instacart+ and strategic partnerships like the one with Costco also contribute to a positive outlook.

CART's financial performance presents a somewhat positive but complex picture. Revenue has increased from $803 million in Q4 2023 to $914 million in Q2 2025, indicating growth in sales. The gross profit ratio has remained relatively stable, fluctuating between 0.73 and 0.75, suggesting consistent profitability at the gross level. Operating cash flow is generally positive, with the latest quarter showing $203 million, although Q3 2023 saw a lower $111 million. Total debt decreased from $40 million in Q4 2023 to $37 million in Q2 2025, indicating improved solvency. However, Q3 2023 shows a significant net loss of $1.999 billion, due to very high research and development, general and administrative, and selling and marketing expenses, which skews the overall profitability assessment. While the company demonstrates revenue growth and positive cash flow, the large net loss in Q3 2023 warrants careful monitoring of expense management and its impact on future profitability.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting efficient cost management. Return on Equity (ROE) has shown positive movement, signaling enhanced profitability and efficient use of shareholder equity. The Price-to-Earnings (P/E) ratio, while elevated, might be justifiable given the growth trajectory and positive ROE trend. The Debt-to-Equity ratio shows a slight increase, which warrants monitoring, but is counterbalanced by a healthy Current Ratio, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable picture with growth and profitability, though the leverage should be watched closely. The combination of growth and profitability suggests potential for continued positive performance over the next 12 months.