Arm’s IPO, Instacart’s Valuation, and Salesforce’s Year of Efficiency | Prof G Markets

Ad Revenue

Instacart's revenue model heavily relies on advertising, much like Amazon's approach. Scott Galloway explains that while the company positions itself as a tech firm, a significant portion of its income comes from advertising on its platform. This strategy allows Instacart to achieve high margins, with advertising contributing substantially to its profitability 1.

Instacart is not in the business of grocery. It's in the business of selling you groceries such that it can sell ads against that content of produce and meat.

--- Scott Galloway

This advertising-driven model has enabled the company to grow its revenue and maintain profitability over multiple quarters 2.

   

Valuation

Instacart's valuation has seen significant fluctuations, particularly since its peak in 2021. Scott Galloway notes that the company's valuation was slashed from $39 billion to $10 billion due to various market dynamics and investor expectations 3. He emphasizes the complexities involved in IPO dynamics and how investor preferences can impact a company's valuation journey.

Be careful about raising money at a really big valuation. Those investors are expecting you to have a liquidity event in three to seven years at 750 million.

--- Scott Galloway

These valuation adjustments reflect broader trends in the market and the challenges faced by companies in maintaining high valuations 4.