October trends hold really strong for Instacart, says Needham's Bernie McTernan

Core Insights - Instacart reported strong Q4 guidance with a top and bottom line beat, leading to initial share price gains that later moderated after the earnings call [1] - The company experienced robust trends in October, resulting in a double-digit guidance for Gross Transaction Value (GTV) at the midpoint, compared to 9% over the past four quarters, indicating positive sentiment [2] - Instacart's primary customer base consists of families, with 75% of GTV coming from large basket purchases, showcasing its strength in this segment [3] Financial Performance - The stock is currently trading at approximately seven times EBITDA, with expectations of high single-digit GTV growth and mid-teens EBITDA growth for the next year, suggesting the stock is undervalued [6][7] - The company announced a $250 million accelerated share repurchase (ASR) and increased its buyback program by $1.5 billion, indicating a strategy to leverage current depressed trading levels [7] Competitive Landscape - Concerns regarding competition, particularly from Amazon losing exclusivity with Kroger, have impacted stock performance, despite the company's resilience in the market [6][7] - The overall consumer sentiment has improved, with companies in the discretionary sector, including Instacart, benefiting from advancements in AI to drive conversions and enhance e-commerce performance [9][10]