Deliveroo sees £1.8bn wiped off its value as shares slump by a quarter on its much-anticipated stock market debut
- Launch price of 390p was at bottom end of planned float
- But shares fell dramatically on the open by 30% to 271p
- The stock settled at 295p which was 24 per cent below the opening level
- £1.8bn wiped off the £7.6bn value of the firm at launch
Shares in Deliveroo tanked today, wiping £1.8billion from the tech takeaway firm’s value as it made its long-awaited stock market debut.
The listing price of 390p per share valued the company at £7.6billion, which was at bottom end of the delivery firm’s initial pricing range following an investor backlash over staff working conditions.
But on the London open shares plunged 30 per cent to 271p, before recovering some of the losses to stand 95p down at 295p – a fall of 24 per cent on the opening price of thge float.
Strong demand for Deliveroo’s float has been overshadowed in recent days by criticism from heavyweight investors over the status of tens of thousands of the firm’s delivery riders
Lee Wild, Head of Equity Strategy at interactive investor, called the IPO ‘disastrous’.
‘The run-up to Deliveroo’s stock market debut has been marred by criticism of the company’s treatment of delivery riders, and by doubts among many top fund managers who chose not to invest in the flotation,’ he said.
He noted that existing shareholders in Deliveroo sold stock amounting to £500million pre-open at the launch price of 390p, which ‘looks like great business for the sellers’.
Big City investors have been put off by a number of concerns. The company doesn’t make a profit despite huge tailwinds from the pandemic. Deliveroo had to be bailed out by Amazon last year, and it continues to operate in a highly competitive market.
Aviva and Aberdeen Standard opted out of the IPO citing ESG concerns related to the company’s treatment of its employees.
There are fears that it could face an employment rights crackdown akin to Uber, which was forced to overhaul how it pays taxi drivers.
ESG investors are also turned off by governance issues: founder and chief executive Will Shu still has more than 50 per cent of shareholder voting rights.
Nevertheless, it was London’s biggest listing for a decade, raising around £1billion for expansion efforts. Chancellor Rishi Sunak, hailed Deliveroo’s decision to go public in London as a ‘true British tech success story’.