Deliveroo trading as low as 271p within first 20 minutes of trading
Deliveroo (LON:ROO) plunged by 30% as the food delivery company made its debut on the London stock exchange on Wednesday, marking a disappointing start to one of the biggest IPOs in the city in the last ten years.
According to data from Refinitiv, Deliveroo was trading as low as 271p within the first 20 minutes of trading, way lower than the offering price of 390p.
The UK-headquartered company priced 384.6m shares at 390p each, the bottom of its target range, meaning Deliveroo was valued at £7.6bn, which is the highest in London since Glencore in 2011.
The company, which has been backed by Amazon, raised £1.5bn from investors.
Deliveroo opted to list at the lower end of its range despite the fact it could have raised £1.77bn. The decision was made as companies with similar business models saw their share prices fall recently.
Only institutional investors are able to participate in Deliveroo’s market debut on march 31, while private investors will be able to buy stock as unconditional trading commences on April 7.
Deliveroo, founded in 2013, posted losses of £224m last year however its revenue rose by 54%, as takeaway orders surged due to pandemic lockdowns across Europe.
The food delivery company, which operates internationally, but committed to making London its “long-term home”, had its sights set on a $10bn valuation ahead of its initial public offering.
Will Shu, who founded Deliveroo in London eight years ago, said the city was “a great place to live, work, do business and eat. I’m so proud and excited about a potential listing here”.
“Deliveroo has gone from hero to zero as the much-hyped stock market debut falls flat on its face. It had better get used to the nickname ‘Flopperoo’,” says AJ Bell investment director Russ Mould.
“Initially there was a lot of fanfare about the Amazon-backed company making its shares available to the public, including the ability for customers to buy stock in the IPO offer,” Mould added.
“Sadly, the narrative took a turn for the worst when multiple fund managers came out and said they wouldn’t back the business due to concerns about working practices.”