Instacart NASDAQ:CART fell 0.91% in premarket as Citizens reiterated a Market Outperform rating and $60 price target on the grocery delivery platform, representing roughly 24% upside from the current price of $48.39. Analyst Andrew Boone said Instacart's Carrot Ads return on ad spend should outperform the broader grocery industry, supported by the company's 2,200 retail partners and AI models trained specifically on grocery data. Instacart's advertising-driven model carries a 73% gross profit margin.
The core argument is domain specificity. Boone said models trained on grocery data outperform general-purpose advertising models in grocery environments because they have deep understanding of basket composition, repeat purchase behavior, seasonal demand patterns, and product substitutions, providing data advantages that general ad platforms cannot replicate. Instacart argues retail media performs best when AI models are trained on data from the same retail domain.