What's going on?

Is it a bird? Is it a plane? Nope: it�s Instacart�s valuation, which the grocery delivery app revealed earlier this week has doubled twice since the pandemic began.

What does this mean?

In a time when everyone�s trying to avoid the local store as much as possible, Instacart�s found a lucrative niche in grocery delivery: the company has increased orders sixfold, added hundreds of thousands of new workers, and raised almost $1 billion from investors since last March.

In fact, a new financing round this week valued the private company at $39 billion � up from $18 billion last November, itself up from $8 billion before the pandemic. That officially makes Instacart the second-biggest private US startup, just behind Elon Musk�s SpaceX. No surprises, then, that it�s reportedly preparing to hit the stock market sooner rather than later (tweet this).

Why should I care?

Zooming in: Is Instacart flawed?

On the face of it, Instacart�s impressive valuation makes sense when you consider that the US grocery industry is worth as much as $1.3 trillion. But that market slims down real fast when you�re at the bottom of the food chain: Instacart picks up groceries for delivery after the retailer has stocked the shelves and after it�s paid by shoppers. In other words, after the retailer�s made its already notoriously low profit. That leaves Instacart with a market worth just $45 billion, and makes it difficult � if not downright unlikely � that it�ll earn enough profit to justify its valuation.

Zooming out: � is Instacart really flawed?

Instacart is facing fierce competition on all sides too � whether from delivery apps like Uber, online grocery players like Walmart and Amazon, and, of course, grocery retailers themselves. The latter in particular might�ve been galvanized by the pandemic to start investing more in their own ecommerce systems � and if they get them right, those customers might be able to ditch the app altogether�