Instacart/DoorDash combo best fit to take on Walmart and Amazon -- analysts

What happened

Analysts say Instacart and DoorDash combining would best challenge Walmart and Amazon in grocery delivery. Uber reportedly ended acquisition talks, leaving DoorDash as the most likely buyer of its rival Instacart.

Confirmed

Global impact / market context

A combined Instacart and DoorDash would pool grocery delivery customers and merchant relationships, giving the pair more scale to compete with Walmart and Amazon. Less competition could also change delivery fees and how much bargaining power merchants have in negotiations.

Analyst inference

Citi projects Instacart's gross transaction value, which means the total value of orders placed, at $42.3B this year, up 13.6%. Wells Fargo sees Instacart as attractive, citing modest 9x 2027 EBITDA, which means earnings before interest, taxes, depreciation and amortization.

Analyst inference

What to watch

1. Whether DoorDash formally agrees to acquire Instacart, after Uber reportedly ended its discussions, and how the combined company would be structured. Confirmed
2. Analysts suggest the combination as the most formidable answer to Amazon and Walmart, so watch whether a deal is proposed and how investors respond. Proposed
3. Watch Instacart's order volume and average order value of $114 against Citi's $42.3B gross transaction value forecast, since weaker metrics could affect deal interest. Analyst inference

Evidence

• seekingalpha.com