5 Reasons to Buy the Instacart IPO

I wanted to hate last week's Instacart (NASDAQ: CART) offering. The undisputed leader of third-party grocery deliveries hit the market with all the swagger and confidence of a shopper trying to sneak a dozen items through the 10 items or less checkout lane. I figured there was no way that Instacart would pan out as a long-term investment. 

Am I an active user on the platform? Sure. It's convenient, and there are plenty of opportunities to buy Instacart gift cards online at a discount. There are also several credit cards that provide monthly credits to use the service. However, my doubts about the Instacart business model make up a lengthy shopping list. Will consumers put up with the platform's product pricing markups? Can it incentivize its fleet of last-mile contractors in a gig economy with less laborious alternatives? With DoorDash and Uber Technologies encroaching on Instacart's turf, can it cling to its niche dominance?

Then I did what any good investor should do. I cracked open the offering prospectus and looked for the reasons to justify my initial bearishness. In the process of spooning through the metrics I found that Instacart tasted different -- better different -- than I was expecting. The red flags were there. The green shoots surprised me. Let's go over a few reasons why Instacart could be a winner for risk-tolerant growth investors.

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Source Fool.com