(Bloomberg) — Instacart announced a new $500 million share repurchase program, the third round of buybacks the grocery delivery company has authorized since September as it seeks to boost confidence in its growth potential.
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The board approved the buyback plan on June 2, according to a regulatory filing released on Thursday. Instacart had completed its two previous authorizations for $1 billion in repurchases, equivalent to about 34 million shares or more than 10% of those outstanding, the company said.
“Our business is performing well and we remain focused on deepening our lead as the largest online grocery marketplace,” said Chief Financial Officer Emily Reuter in a statement. Reuter said the company had about $1.7 billion of cash and equivalents at the end of the first quarter “allowing us to continue to invest in growth while repurchasing shares.”
Shares of Instacart were up as much as 6.4% after trading opened in New York on Thursday.
Instacart, which trades under Maplebear Inc., had fallen below its September initial public offering price of $30 for months before several stock rating upgrades and a broader market rally helped push shares higher. The stock closed at $30.95 on Wednesday and had jumped 32% this year.
Analysts have grown more confident in the trajectory of the shares after the company posted steady results in the most recent quarter, with some raising their price targets. The stock has 14 buys, 11 holds and one sell rating.
JPMorgan Chase & Co. analysts wrote in a March note that Instacart’s stock buyback program helps “reduce volatility” in its stock and “adds stability” now that the IPO lock-up period has passed.
“Beyond near-term numbers, we believe there is greater appreciation among both investors and competitors for the complexity of large-basket online grocery orders, and we view CART’s technology, retailer partnerships, and experience as key competitive advantages,” wrote the JPMorgan analysts, led by Doug Anmuth.
–With assistance from Ryan Vlastelica.
(Updates share price in the fourth paragraph.)
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