How far have the talks progressed, and how is the market pricing the deal?

  • According to The Wall Street Journal, DoorDash is in advanced talks to acquire Instacart, with a deal possible as soon as that week; Bernstein notes that it remains uncertain whether the parties will reach an agreement.
  • If the reported 17 billion dollars refers to Instacart's equity value, Bernstein estimates an acquisition price of about 67–68 dollars per share, a premium to the roughly 52 dollars before the news emerged; the share price was about 60 dollars when the report was written.
  • Bernstein believes the gap may reflect substantial use of stock tied to DoorDash's weaker share price as payment, or the market assigning a roughly 50% probability that DoorDash walks away or antitrust scrutiny blocks the deal. Financing arrangements have yet to be determined; the firm expects debt, stock and existing cash to be the main possible sources.

Why does the market share rise from 3.5% to 88%?

  • Bernstein estimates that DoorDash's U.S. grocery and retail business will generate about 25 billion dollars in gross order value in 2026, or about 20 billion dollars excluding retail; Instacart's figure is about 40 billion dollars after excluding the contribution from Uber's restaurant business. The firm uses a combined total of about 60 billion dollars as the basis for its analysis and assumes regulators will use a broad measure of order value.
  • Using the entire U.S. grocery market as the denominator, the two companies' combined share is about 3.5%; using the online grocery market, it is about 23%, the measure Bernstein believes warrants the closest attention. eMarketer estimates that online sales will account for about 16% of U.S. grocery sales in 2026.
  • Comparing only online platforms, including Amazon and third-party platforms, the combined share is about 34%; narrowing the group to the third-party platforms DoorDash, Instacart and Uber raises the share to about 88%. The scale of Amazon's business is difficult to estimate precisely, and the 34% calculation uses eMarketer data.

Why might grocers object, and what alternatives do consumers have?

  • From grocers' perspective, consolidation of third-party online sales channels would reduce choice. Bernstein believes weaker merchant bargaining power could result in higher platform commissions and push up prices over the long term.
  • But merchants set their own product prices and can continue investing in their own online channels; consumers also have in-store shopping and other online options, while on-demand delivery offers a convenience service. All these factors could influence the competition analysis.

What does DoorDash want to gain, and what must it answer?

  • Bernstein sees long-term value in the deal: a merger could increase delivery network density, add Instacart's experience handling large grocery orders, and expand the platform's share of spending by corporate customers and consumer goods brands, making it better able to help merchants compete with Amazon's and Walmart's online grocery businesses.
  • The firm expects DoorDash to continue investing in the acquired business, while the two companies may have overlapping operating expenses that can be reduced. The market's reaction to DoorDash, however, has been negative: investors had expected clearer operations in 2027 after the company integrated Wolt and Deliveroo, and now face another deal.
  • If the acquisition proceeds, management will need to explain the financial benefits and why it chose to buy now; the news has also raised more questions among investors about DoorDash's organic growth efforts in grocery. Bernstein maintains an outperform rating on both DoorDash and Instacart.