Instacart, Inc. (Maplebear Inc.) stock plummeted 7.81% in pre-market trading on Wednesday, following news that e-commerce giant Amazon is expanding its same-day grocery delivery service to include perishable foods. This move by Amazon is seen as a direct challenge to Instacart's business model and market share in the competitive grocery delivery space.
Amazon announced that Prime subscribers in over 1,000 U.S. cities can now receive perishable items such as strawberries, milk, meats, and frozen dinners on the same day they order them. The company plans to expand this service to 2,300 cities by the end of the year, significantly increasing its reach in the grocery delivery market. This expansion is part of Amazon's $4 billion investment to bring same-day and next-day delivery services to more than 4,000 rural U.S. communities.
The move by Amazon intensifies competition in the grocery delivery sector, putting pressure on companies like Instacart and Walmart. With Amazon's vast resources and existing Prime subscriber base, this expansion could potentially eat into Instacart's market share and profitability. Investors appear to be reacting to this news, leading to the significant pre-market drop in Instacart's stock price as they reassess the company's growth prospects in light of increased competition from a major player like Amazon.
