Market values of delivery apps like Gopuff, Gorillas plunge as losses pile up

In January, Gopuff hired Goldman Sachs and Morgan Stanley to work to prepare for a US IPO, Reuters reported. But the company’s bid to go public is now dead in the water, sources said. 

“They can’t go public,” a source with direct knowledge said. “The IPO market has essentially died.” 

Gopuff also issued a convertible note in December to raise $1.5 billion from existing investor Guggenheim Investments and other debt holders. The note will convert to equity at either the IPO price or at a maximum valuation of $40 billion, Reuters reported, citing sources.

A Gopuff spokesperson did not comment on the potential IPO, but said that “the trajectory of our business in the US and Europe speaks for itself.” 

“We are proud to have the continued support from some of the most dynamic and respected investors,” the spokesperson added. 

“We do not comment on financial information but these rumors are unrelated to us.” 

A Goldman spokesperson declined to comment. One source close to the IPO banks said Gopuff expected to go public this year and now it is waiting to see how the market will shake out.

Gorillas and Jokr did not respond to requests or comment for this story.

Delivering groceries on demand requires massive spending on “dark store” rentals and full-time employees in pricey markets like Manhattan. On top of that, many apps have offered deep discounts or free groceries to lure new customers. 

While investors may have been willing to subsidize the companies during the pandemic-era tech boom, insiders say that times have changed. 

“Investors are getting very weary of these high-cash burn instant delivery companies,” said Next Round Capital CEO Ken Smythe, who advises institutional investors buying and selling stakes in private startups.

Would-be investors in the apps have been scared off by the poor market performance of Doordash and the intense capital needs of the fiercely competitive delivery market, Smythe said.

Doordash went public in 2020 and saw its shares soar to an all-time high $257 in November. But its stock has since plummeted to less than $104 as of Thursday amid a broader tech rout and weak appetite for companies with high customer acquisition costs.

“They are saying, ‘Just look at DoorDash’s stock,’” Smythe said of potential investors. “If Gopuff needs to raise additional capital, it may not be pretty”

Faced with an increasingly hostile market, delivery apps have taken steps to cut costs in recent months. 

Gorillas recently upped delivery times from just 10 minutes to as much as an hour in an apparent bid to save on labor costs, as first reported by The Post in February.

Meanwhile, Gopuff slashed about 100 jobs and paused plans to open new locations, Insider reported in January. The Information reported the same month that Jokr is exploring a sale to a competitor — a claim the company has denied. 

The companies are also facing pressure from New York City politicians including council members Gale Brewer and Christopher Marte, who have both accused the apps of flouting zoning laws by operating warehouses in retail-zoned spaces.

In addition, Marte is planning to introduce a bill that would bar grocery apps from promising excessively quick delivery times because they incentivize delivery workers to break traffic laws, as first reported by The Post.

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