A possible DoorDash-Instacart deal is all about keeping up with Walmart and Amazon, analysts say

By Bill Peters

The Wall Street Journal reported on Monday that DoorDash was in 'advanced talks' to buy Instacart in a deal that would value Instacart at roughly $17 billion

A DoorDash acquisition of Instacart would shake up the grocery-delivery industry.

A potential tie-up between DoorDash and Instacart would help the delivery apps address the two biggest elephants in the room for the grocery industry: Walmart and Amazon.

The Wall Street Journal reported on Monday that DoorDash (DASH) was in "advanced talks" to buy Instacart (CART) in a deal that would value the latter company at some $17 billion. A deal could be wrapped up as soon as this week, the Journal said, but added talks could still fall through.

Instacart declined to comment. DoorDash did not immediately respond to a request for comment.

Wedbush analysts, in a note on Monday, said that a deal made sense, as Instacart loses some online grocery-delivery business to Walmart (WMT) and Amazon (AMZN), who have rapidly built out their online grocery-delivery networks. A deal would help the combined company go head to head with those retail giants.

"A combination of strong restaurant delivery plus a marketplace including various grocers from Instacart can be a critical combination against Walmart and Amazon in particular, who continue to push in this market as well," they said.

Shares of Instacart finished 7.9% higher on Monday. However, investors appeared less enthusiastic about the impact on DoorDash, sending shares 6.1% lower during the regular session.

DoorDash's stock is already down 25.6% so far this year, amid concerns over cautious consumers and artificial-intelligence disruptions. Instacart's stock is up around 35% year to date.

The Information last week reported that Instacart was exploring a sale, generating interest from DoorDash (DASH) and Uber Technologies (UBER). The Journal on Monday said the discussions with Uber were "no longer active."

The news reports follow years of consolidation in the online food-delivery industry, and arrive as more people shop for their groceries online. EMarketer forecasts U.S. online grocery sales growth of 12.9% this year, with online sales accounting for 15.5% of overall grocery sales.

Walmart, the Wedbush analysts said on Monday, was the leader in those sales, with market share of 30.9%, beating out Amazon's 23.6%. Instacart and supermarket chain Kroger (KR) trailed both.

Zak Stambor, an analyst at eMarketer, said in written remarks on Friday that Instacart's sales had grown more slowly than DoorDash over the past year. He also suggested that the platform risked a drop in relevance as its larger rivals competed more aggressively.

"Instacart risks getting squeezed between retailers building their own digital channels and larger platforms that can bundle grocery with other services, giving consumers more reasons to keep coming back," he said.

DoorDash over the years has expanded beyond restaurants into delivery of other goods from other retailers, and has invested in building out its tech infrastructure to handle more complex deliveries - sometimes at the expense of profits. It has also rolled out autonomous delivery vehicles and, like Instacart, offered purchases via ChatGPT.

"Key questions would be on product or merchant overlap, plus how the Instacart brand integrates into the broader acquirer's brand," the Wedbush analysts said. "We don't expect material regulatory pushback given the strength from Amazon and Walmart here."

Bernstein analysts, in a note on Monday, said there was logic to a potential deal between DoorDash and Instacart, and that the two, when joined together, would be an "indispensable solution." Any deal, they said, would require some combination of debt, cash on-hand or equity.

They also said they were surprised at how quickly a possible deal was moving.

"Our initial interpretation . . . was that likelihood of a deal was low considering it was [Instacart] approaching DASH/UBER and not vice versa," they said. "Here we are now."

-Bill Peters

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10-26-26 1746ET