A much-ballyhooed Instacart IPO has been put on the shelf, as tech companies that boomed during the pandemic are now suffering a cruel correction.
One of the odd, unexpected financial consequences of the COVID-19 pandemic was that tech companies made money hand over fist, while unemployment otherwise skyrocketed in every other sector, and the broader national economy tanked. And being tech companies, they figured these trees would grow to the sky, that there would never be a correction, and so they bet the farm their new revenue from the shut-in economy would never run dry.
But of course, it did run dry. The latest victim is San Francisco-based grocery delivery app Instacart, as Reuters reports the company is calling off its planned 2022 IPO. And it’s a pretty stunning development, as according to Reuters, Instacart “had planned to reveal their IPO filing in the coming days.”
Moreover, Instacart had just pulled a round layoffs last month, specifically in hopes of looking “leaner and meaner” to investors. (If you got laid off at Instacart just to help their standing for an IPO that is now not happening, oh, my DMs are open.) Though in fairness, Reuters reports that Instacart “has not ruled out” an eventual IPO at some point down the road.
But certainly now is not the time, as the downturn in the IPO market is staggering, Last year, according to Reuters, IPOs pulled in a “record $154 billion.” In 2022, that figure is “a little over $7 billion so far this year.” And it's almost holiday time, when IPOs don't typically happen, so the clock is running out on this year.
Those of us who do not work in tech could perhaps care less about the tech stock downturn. After all, the unemployment rate is still a historically low 3.5%, and we can sit and mock investors whose tech stocks and crypto investments are completely tits up right now. But remember that the pandemic tech boom (and its tax windfall) is pretty much why the state of California, and the city of San Francisco, are riding on substantial surpluses at the moment. If the city or state finds dwindling tax revenue puts us back in deficit territory, the collateral damage could be calamitous for all of us.
Image: Marques Thomas via Unsplash