Investors Warily Await the Instacart and Arm I.P.O.s

The market for I.P.O.s looks challenging ahead of two big listings, by Instacart and Arm.Credit…Justin Sullivan/Getty Images

What Instacart and Arm reveal about the state of I.P.O.s

Instacart just published the latest prospectus for its initial public offering, with the grocery delivery company aiming for a valuation of up to $7.8 billion when it prices its shares as soon as next week.

That’s far less than what Instacart fetched in a fund-raising round two years ago. But like Arm, the SoftBank-owned chip designer set to price its own stock offering on Wednesday, Instacart’s shift reflects investor caution as Wall Street slowly warms up to I.P.O.s again.

Instacart’s price range reflects falling private market valuations. In 2021, the company was valued at a heady $39 billion, as venture capitalists poured money into start-ups, especially those that benefited from stay-at-home pandemic restrictions. But rising interest rates and a return to pre-Covid norms have razed valuations: Many privately held companies have taken pricing hits in newer fund-raising rounds.

Arm, too, has seen its valuation fall from high initial expectations: The companyexpects to be valued at as much as $54.5 billion, in what’s potentially the biggest U.S. listing this year. But investorshad expected it to pursue a valuation as high as $70 billion. (The projected appraisal is higher than the $32 billion that SoftBank paid for Arm in 2016.)

Worth noting: Companies routinely put out low valuations at the outset, hoping they can ultimately raise them after pitching potential investors. For underwriters, it’s better to start lower and go higher than the opposite, which would represent an embarrassing misreading of the market.

The context: Arm and Instacart are in the vanguard of companies seeking to open the market for I.P.O.s, after market volatility last year pushed businesses like Stripe, the payment technology company, to delay their listing plans.

I.P.O.s worldwide have raised about $75.7 billion this year through Sept. 7, down 22 percent from last year, according to Refinitiv. But the thaw is happening more quickly in the U.S., where proceeds from offerings are up 180 percent year-on-year.

Silicon Valley and Wall Street are closely watching how both offerings do as a sign of whether other companies should go public — or wait a bit longer for the I.P.O. market to rev up.


The Biden administration denies the G20 watered down its support for Ukraine. U.S. officials defended the Group of 20 meeting’s joint statement, which did not condemn Russia’s invasion of Ukraine. Treasury Secretary Janet Yellen called it “substantively strong.” Others pointed to the summit having reached consensus on overhauling the World Bank and helping poorer countries deal with climate change.

President Biden says the U.S. isn’t trying to constrain China. He said efforts to put limits on Beijing via export controls and other moves are meant only to ensure that China plays by international rules. But Biden’s comments came during a visit to Vietnam, a country he has sought to make a closer ally and an economic partner to help lessen American dependence on Chinese manufacturing.

Alibaba’s outgoing C.E.O. unexpectedly quits its cloud division. Daniel Zhang, who had already announced plans to give up leadership of the Chinese tech giant, had been expected to maintain oversight of the burgeoning business unit. The departure raises questions about Alibaba’s plans to break itself into several businesses.

Meta reportedly races to introduce a more powerful A.I. system. The parent company of Facebook and Instagram is working on a successor to its Llama 2 model, meant to be at least as powerful as the most advanced offering from OpenAI and due out next year, according to The Wall Street Journal. It’s a sign of the fervor among Silicon Valley giants to dominate the field of artificial intelligence.

What makes Elon Musk tick?

For two years, Walter Isaacson embedded himself in Elon Musk’s world for his biography of the world’s richest man. Revelations from the book, set for release Tuesday, have generated headlines: the psychological scars Musk carries from the way his father treated him as a child; his decision to limit Ukrainian access to the Starlink satellite network to prevent military operations; and his last-minute move to fire Twitter’s top executives before their stock options could vest.

Andrew spoke to Isaacson ahead of publication. This conversation has been edited and condensed for clarity.

Have you heard from Musk since some excerpts have been published?

Yeah, but he has not given me any strong reactions. He seems remarkably sanguine.

How does he think about the power he has accumulated?

He has an epic sense of himself, almost as if he’s a comic book character wearing his underpants on the outside, trying to save the world. But I was surprised as he suddenly realizes the difficulty of having so much power.

What drives him?

We all have some demons in our heads from childhood, and he’s got two orders of magnitude more than most of us. And he’s been able to harness those demons into drive.

You saw a lot of headlines get made from the inside. How aware were you of the magnitude of the news being made?

There was one Friday night when I was at a football game at my old high school, and my phone started vibrating. It was the night that Musk was dealing with the Starlink and Crimea issues with Ukraine. I remember standing behind the bleachers being somewhat amazed that all this was happening in real time.

You describe Musk as being almost gleeful when he fired the C.E.O. of Twitter and his lieutenants to prevent them from collecting compensation when the deal closed. What did you think as you were watching this play out?

He thought they had misled him. And like a kid going to wilderness camp, he learned, “I’ve gotta punch people in the nose when they do that.”

You’ve written about a number of people — Benjamin Franklin, Leonardo da Vinci, Steve Jobs, among them — who have, in one way or the other, changed the world. Where does Musk rank?

There have been three people who have deeply affected our age that I’ve written about. One is Steve Jobs. Another is Jennifer Doudna, who helped discover the tool called CRISPR that allows us to edit our own genes. And now Musk. I think he will have a lasting impact by, having more than anybody else, moved us into an era of electric vehicles when the major car companies had given up on that, and into space. But I also think he has some downsides. He will be seen as somebody who was both consequential and controversial.

To read an extended version of this conversation, go here.

The fate of the C.F.P.B.

The Supreme Court next month will hear a case that could threaten the very existence of the Consumer Financial Protection Bureau and undo more than a decade of the regulator’s work.

Chipping away at the watchdog’s mission would put the financial regulatory system — and the wider economy — at risk, Rohit Chopra, the bureau’s director, is expected to warn in remarks at a mortgage industry event on Monday. A copy of his speech was shared first with DealBook.

The dispute hinges on how the C.F.P.B. is funded. In a case about payday lending, an appeals court ruled last year that the C.F.P.B., a frequent target of Republicans, was unconstitutionally funded. The bureau’s budget comes from the Federal Reserve instead of the annual congressional appropriations processes. Therefore, the appeals court held, the watchdog violated the Constitution’s Appropriations Clause and all of its actions were invalid.

The C.F.P.B. is not the only agency with such a funding structure. The Solicitor General’s office, which is arguing the appeal for the C.F.P.B. in the Supreme Court, has noted that “no other court has ever held that Congress violated the Appropriations Clause by passing a statute authorizing spending.”

The case may cause “collateral damage,” military and veterans groups have argued.In an amicus brief siding with the C.F.P.B., they wrote that the unconstitutional appropriations arguments threaten their budgets and others’, and that the decision “endangers Congress’ flexibility in funding federal agencies.”

Businesses want the Supreme Court to tread lightly. A brief by the Mortgage Bankers Association and other real estate industry groups urged the justices not to reverse past C.F.P.B. rules, warning of “potentially catastrophic consequences.” The Chamber of Commerce and business and banking groups opposing the C.F.P.B. similarly called for a narrowly crafted decision for stability’s sake.

“Fifteen years ago, in mid-September, Lehman Brothers collapsed and the financial system crashed,” Chopra plans to say in his speech on Monday. “Troubles in the U.S. mortgage market infected the entire globe, and American families and businesses lost trillions of dollars and experienced an incalculable level of pain.” That loss led to the creation of the C.F.P.B. to protect against a repeat.

The Supreme Court will hear arguments on the matter on Oct. 3.

$5.6 billion

The cost to the U.S. economy in lost G.D.P. if the United Auto Workers contract dispute with Ford, General Motors and Stellantis were to break down, leading to a strike lasting just 10 days, according to a new analysis by the Anderson Economic Group.

The week ahead

The unveiling of a new iPhone model, a pivotal Big Tech antitrust case and a new batch of inflation data — here’s what to watch.

Tuesday: Apple is set to reveal its latest iPhone model, expected to be its priciest yet, as smartphone sales decline worldwide. And the biggest antitrust case in a generation kicks off as the Justice Department takes on Google over whether the tech giant used its dominance in search to squash rivals.

Wednesday: The Consumer Price Index is set to be published; economists polled by Bloomberg expect “core” inflation to have edged down last month, though rising energy costs probably pushed up the headline figure.

Thursday: The release of August retail sales data and the Producer Price Index will offer more clues on the pace of inflation ahead of next week’s Fed rate-setting meeting. It’s also decision day for the European Central Bank. Even with eurozone inflation running hot, economists expect the central bank to hold interest rates steady.



  • J.M. Smucker is reportedly near a deal to buy Hostess, the maker of Twinkies, for around $4 billion. (WSJ)

  • The law firm Paul Weiss has poached more partners from Kirkland & Ellis, as the two fast-growing firms bet on a boom in private equity. (FT)


  • Washington should let asylum seekers begin working immediately to alleviate an immigration crisis that is hurting cities like New York, Mike Bloomberg argues. (NYT Opinion)

  • The United States and Saudi Arabia are said to be in talks to secure supplies from Africa of metals needed for batteries to lessen their dependence on China. (WSJ)

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  • Meet the private banker at Bank of America who caters to moguls like Carl Icahn and Martha Stewart. (WSJ)

  • “Can Golf Cure Its Water Addiction?” (WaPo)

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