Wedbush says DoorDash extended Kroger partnership challenges Instacart position

Wedbush notes that on Monday morning, DoorDash (DASH) announced that it would be expanding its partnership with Kroger (KR). Starting October 1, about 2,700 Kroger stores will launch on the marketplace. The companies will also be deepening their partnership by collaborating on several innovations. DoorDash’s extended partnership with Kroger directly challenges Instacart’s (CART) position among intermediaries, the firm says. In Wedbush’s view, Instacart is at risk of losing incremental market share to other leading intermediaries and grocers that can leverage their scale and success in adjacent categories to capture demand for online grocery and convenience. The firm estimates that Kroger accounts for 10%-plus of Instacart’s GTV, and while the platform will still power Kroger’s same-day delivery service, today’s announcement validates its thesis as Instacart may be losing its perceived position as Kroger’s preferred partner for same-day delivery. Wedbush has an Underperform rating on Instacart with a price target of $42 on the shares.