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Instacart's $500M Buyback Sparks 9% Rally, Options Traders Reap 230% Gains

Updated: Jun 8

Maplebear [Instacart] (CART) - ★★ - Ranked #75 in our Q2 2024 SMID Equity Rankings



In a significant boost to investor confidence, shares of Maplebear Inc., the parent company of grocery delivery giant Instacart, soared 9% on Thursday following the announcement of a new share repurchase program. The company's board approved an additional $500 million for share buybacks on June 2, as revealed in a regulatory filing.


The move comes after Instacart successfully completed two previous rounds of authorized buybacks totaling $1 billion, equivalent to approximately 34 million shares outstanding. The average price of these buybacks was $29.41 per share, which is notably lower than Thursday's midday trading price of $33.68, representing a 15% increase.


Share repurchase programs are often interpreted as a signal of management's confidence in a company's growth prospects and stock performance.


The company's robust financial health is evident from its balance sheet, which showed approximately $1.7 billion in cash and equivalents at the end of the latest quarter. This strong cash position easily covers the newly authorized $500 million repurchase program.


In March, our Q2 2024 SMID Equity Rankings assigned Instacart a ★★ ranking with a Negative short term outlook and a twelve-month price target of $44.00. Despite this cautious outlook, the recent share price jump has been a boon for bullish options traders. July 19 2024, $35 strike price call options saw a staggering 230% increase in one day, closing at $1.22 ($122) per contract, up from the previous day's close of $0.36 ($36).


As Instacart continues to dominate the online grocery delivery space, investors will be closely watching how this latest share repurchase program impacts the company's stock performance and long-term growth strategies.


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The information provided in this report is for general informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The opinions expressed in the report are our own and are subject to change without notice. We may have a position in the securities mentioned in the report, and we may buy or sell such securities without notice. Any investment decisions made based on the information in this report are solely the responsibility of the recipient. We do not accept any liability for any direct, indirect, or consequential loss arising from any use of this report or its contents.

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