DoorDash (DASH.US) is most likely to take over Instacart (CART.US). Analyst: This combination is the “best solution” against Amazon and Walmart

The Zhitong Finance App learned that, according to reports, Instacart (CART.US) is evaluating sales options, and Uber (UBER.US) and DoorDash (DASH.US) were initially viewed as potential bidders. Despite news that Uber has terminated the acquisition negotiations, DoorDash currently seems most likely to take over this competitor in the grocery delivery sector. Analysts generally believe that the merger between InstaCart and DoorDash is most likely to be implemented, and it is also the combination that can best compete with the continued expansion of Amazon (AMZN.US) and Walmart (WMT.US) in the field of grocery delivery.

Wells Fargo analyst Ken Gawrelski pointed out, “Instacart's exploration of strategic options is not surprising because the market has not given its proper return on solid fundamental execution; Instacart has outperformed the Nasdaq index by 18 percentage points since its September 2023 IPO.”

Citibank Research analyst Ronald Josey predicts Instacart's total transaction volume (GTV) will reach $42.3 billion this year, up 13.6% year over year, driven by 370 million orders and an average customer unit price of $114, which “highlights the coverage, frequency of use, and user engagement of the service on its platform.”

Based on these metrics, Wells Fargo's Gawrelski believes Instacart is an “attractive strategic asset: a strong terminal market, steady growth, enviable profit margins, and corresponding to only 9 times the 2027 EBITDA.”

This also confirms Instacart's expanding list of strategic partners, including Meta's Muse (META.US), Dollar General (DG.US), Airbnb (ABNB.US), Gopuff, Academy Sports (ASO.US), and World Market.

Josey pointed out that as the Internet evolves and personal intelligence agents become a daily habit, “we believe that supplier size and large audience/subscription users are the core of continued usage and share growth, and Instacart has both.” Wedbush's Ygal Arounian expects Instacart to account for about 60% of grocery intermediary e-commerce sales by 2027.

Instacart is expected to be priced at around $65 per share (median valuation range of $16 billion to $17 billion), a 27% premium over Friday's closing price.

Instacart's impressive growth has been translated into stock price performance: its stock price has accumulated a 42% increase since this year, while DoorDash's stock price has dropped 33.5% over the past year.