Deliveroo’s long awaited stock market debut has been dubbed “the worst IPO in London’s history” after nearly £2 billion was wiped from its value.
Deliveroo ended its first day of trading down 26 per cent at £2.87 per share, giving it a market capitalisation of £5.6 billion.
This was considerably less than the £8.8 billion it had originally targeted, even after dropping its target price to £7.6 billion days before its float.
While its float was one of the worst first day performances on record, it still represented London’s largest listing since ecommerce giant THG in September, raising £1.88 billion.
Deliveroo was pitched as a potential revival for the London financial sector, with the government hoping its performance could attract more high-growth tech firms to list in the UK instead of European exchanges like Amsterdam.
According to the Financial Times, one of Deliveroo’s own bankers called it “the worst IPO in London’s history”, with bankers, advisors and investors blaming “at least three” big short sellers for the opening dive in share price.
Others have pointed to the timing of the IPO, pointing to the wider markets sharp shift away from tech companies which have flourished during the pandemic towards ‘recovery stocks’.
“It’s not a great endorsement of setting IPOs in the UK,” analyst at Mirabaud Securities Neil Campling said.
“You have the combination of poor timing, as many ‘at home’ stocks have been under pressure in recent weeks, and the well-publicized deal ‘strike’ by a number of A-list institutional investors.”
Deliveroo was also faced with a growing backlash from major investors after a damning report found that around a third of its riders were paid less than minimum wage.
Just weeks earlier gig-economy pioneer Uber announced it would now consider all of its 70,000 UK drivers ‘workers’, allowing them increased rights and pay.
Deliveroo, which has so far never turned a profit, has explicitly said its model would struggle to function if it was required to class its riders as workers.
This frightened investors who predict its only a matter of time before similar legal challenges over workers rights are brought to Deliveroo.