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Investing.com -- Piper Sandler cut its rating on Instacart to Neutral from Overweight, saying recent moves by Amazon, Walmart, Uber and DoorDash have intensified competitive pressure and left Instacart vulnerable to losing share.
"We move to the sidelines on CART in light of competitive pressures over the last month," Piper Sandler analysts said.
The brokerage said the issue is less about Instacart’s upcoming quarter and more about an industry dynamic that now pits the company against far larger players with lower pricing power and fast-growing delivery rivals signing fresh grocery partnerships.
Amazon plans to expand same-day perishable delivery to 2,300 U.S. cities by year-end, while Walmart aims to reach 95% of the population with delivery in under three hours.
Uber last week announced a nationwide partnership with Aldi and DoorDash followed with a broader agreement with Kroger.
Those two announcements alone wiped roughly 10% off Instacart’s stock each time.
Piper said digital grocery remains an attractive $200 billion market growing in the low to mid-teens, but Instacart risks getting “pinched in the middle” as Walmart and Amazon leverage scale and Uber Eats and DoorDash grow faster.
Pricing may be another weak spot, with Piper citing studies suggesting Instacart delivery carries a roughly 30% premium to in-store grocery baskets, around $50 more per week, while Walmart and Amazon could offer lower-cost options.
Alternative data was mixed, with Kroger touting its Instacart partnership but Instacart downloads down mid-single digits year to date and web visits down 14%.
Piper trimmed gross transaction value and EBITDA forecasts and set a new price target of $41. While it does not expect Instacart to miss third-quarter numbers, it said the path ahead “looks treacherous” and it is stepping aside until competition and pricing risk become clearer.