DoorDash (DASH.US) is the most likely to acquire Instacart (CART.US), analysts say: this combination is the "optimal solution" to compete against Amazon and Walmart.

According to reports, Instacart (CART.US) is evaluating sale options, with Uber (UBER.US) and DoorDash (DASH.US) initially considered as potential bidders. Although there are reports that Uber has ended acquisition talks, DoorDash currently appears most likely to take over this competitor in the grocery delivery sector. Analysts generally believe that a merger between Instacart and DoorDash is the most probable outcome and represents the strongest combination to counter the ongoing expansion of Amazon (AMZN.US) and Walmart (WMT.US) in the grocery delivery market.

Wells Fargo analyst Ken Gawrelski noted: “It is not surprising that Instacart is exploring strategic alternatives, as the market has not rewarded its solid fundamental execution as it should; since its IPO in September 2023, Instacart has underperformed the Nasdaq Index by 18 percentage points.”

Citi Research analyst Ronald Josey expects Instacart’s total gross transaction value (GTV) to reach $42.3 billion this year, a 13.6% year-on-year increase, driven by 370 million orders and an average order value of $114. This “highlights the service’s reach, frequency of use, and user engagement on the platform.”

Based on these metrics, Wells Fargo’s Gawrelski believes Instacart is “an attractive strategic asset: the end market is strong, growth is solid, margins are enviable, and it is valued at only 9x expected 2027 EBITDA.”

This is also reflected by Instacart’s ever-expanding list of strategic partners, recently including Meta’s Muse (META.US), Dollar General (DG.US), Airbnb (ABNB.US), Gopuff, Academy Sports (ASO.US), and World Market.

Josey pointed out that with the evolution of the internet and personal intelligent agents becoming daily habits, “we believe that vendor scale and a large audience/subscriber base are core to continued usage and share gain—both of which Instacart possesses.” Wedbush’s Ygal Arounian forecasts Instacart will account for around 60% of intermediary grocery e-commerce sales by 2027.

Instacart is expected to be priced at around $65 per share (midpoint of a $16–17 billion valuation range), a premium of about 27% over Friday’s closing price.

Instacart’s impressive growth has translated into stock performance: its share price has risen 42% so far this year, while DoorDash’s stock has fallen 33.5% over the past year.