Instacart (CART 7.07%) has been one of the hottest initial public offerings (IPOs) in 2023. The company, which is officially Maplebear but does business as Instacart, delivered a lot of buzz on its first day of trading after its stock jumped 40% at the open. Although it cooled off in the weeks after its IPO, it remains a very exciting company.

Its growth potential is fueling the Instacart excitement. The grocery technology company helps brick-and-mortar grocery stores enter the digital age primarily by providing the technology backbone so customers can shop for groceries online. A personal shopper will prepare their order and deliver it to their door, or they can pick it up curbside.

Instacart's big-time growth prospects might have you interested in buying its stock. You could be contributing to its growth by being an avid user of its services. Here's a step-by-step guide on how to add the food delivery stock to your cart and become a shareholder.

How to buy

How to buy Instacart stock

Step 1: Open a brokerage account

You'll have to open and fund a brokerage account before buying shares of any company. If you still need to open one, here are some of the best-rated brokers and trading platforms. Take your time to research the brokers to find the best one.

Step 2: Figure out your budget

The Motley Fool's investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years. You don't have to get there on the first day. For example, if you have $1,000 available to start investing, you might want to begin by allocating that money equally across at least 10 stocks and then grow from there.

Step 3: Do your research

It's essential to thoroughly research a company before buying its shares. You should learn about how it makes money, its competitors, its balance sheet, and other factors to make sure you have a solid grasp on whether the company can grow value for its shareholders over the long term. Continue reading to learn more about some crucial factors to consider before investing in Instacart stock.

Step 4: Place an order

• The number of shares you want to buy or the amount you want to invest to purchase fractional shares
• The stock ticker (CART for Instacart)
• Whether you want to place a limit order or a market order (The Motley Fool recommends using a market order since it guarantees you buy shares immediately at the market price.)

Should I invest?

Should I invest in Instacart?

Doing your research is vital to see whether a stock is right for you. This process could make you even more excited about buying shares in the company because it increases your confidence that they could be a big winner. However, you might also learn something in this process that changes your mind about buying shares.

• You're a fan of Instacart and use its services regularly.
• You believe it can fend off the competition and be a leader in grocery delivery.
• You think the company can grow its sales and revenue rapidly as more customers buy groceries online.
• You believe Instacart's stock can outperform the S&P 500 over the next three to five years.
• You want to invest in a recent IPO.
• Adding a technology company focused on the consumer staples industry would help diversify your portfolio.
• You think Instacart's valuation is attractive.
• You understand that shares of Instacart could be volatile and may lose money.
• You don't need dividend income right now.

• You prefer the services of technology-based rivals like DoorDash (DASH -0.25%) or Uber (UBER 0.56%).
• You're worried Instacart has too much competition, including retailers with their own online delivery platforms, like Walmart (WMT -1.43%), Target's (TGT 0.4%) Shipt, or Amazon's (AMZN -0.36%) AmazonFresh.
• You're not sure Instacart can beat the S&P 500 over the next five years.
• You're not sure online grocery shopping will grow that much in the future.
• You don't like to chase hot IPOs.
• You already own a lot of technology and food stocks in your portfolio.
• You're looking to invest in stocks with less volatility than a recent IPO like Instacart.
• You're concerned that insiders still controlled more than 90% of the company's outstanding shares after its IPO.
• You're in or nearing retirement and seeking income-producing investments.

Profitability

Is Instacart profitable?

Given its recent IPO, Instacart has yet to report quarterly earnings as a publicly traded company. However, the grocery technology company did include its most recent financial results in its IPO prospectus. They showed that it's solidly profitable, which is unusual for a venture capital-backed technology company.

Hopefully, Instacart will remain focused on profitable growth. That should enable the company to grow shareholder value over the long term.

Dividends

Does Instacart pay a dividend?

Instacart doesn't currently make dividend payments. As a recent IPO, the company has yet to initiate a dividend. It likely won't start paying dividends anytime soon. The fast-growing company will likely retain earnings to fund its continued expansion.

ETF options

ETFs with exposure to Instacart

However, as a relatively recent IPO, Instacart had yet to make its way into most ETFs as of late 2023. That's because many ETFs track stock market indexes with eligibility requirements.

Another eligibility requirement for some indexes is that at least 10% of a company's outstanding shares trade freely (i.e., float) on an exchange. However, Instacart only floated 8% of its shares in its public offering. It would have to increase the percentage to be eligible for certain indexes and the ETFs tracking them. Investors must wait a bit longer to passively invest in Instacart through ETFs.

Stock splits

Will Instacart stock split?

Instacart doesn't have an upcoming stock split scheduled. The company only recently completed its IPO. While shares of the grocery delivery company popped 40% at the open of its IPO, they quickly gave back those gains. Instacart stock would need to stage a significant surge before it would consider splitting its stock.

Related investing topics

The bottom line on Instacart

Instacart sees a tremendous opportunity in bringing the grocery industry online. It believes its tools could help shift more sales online, which would increase its revenue and profits. That makes its upside potential interesting for investors comfortable with the volatility of a recent IPO.

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