Deliveroo’s disastrous initial public offering (IPO) shows that London’s stock market is scared of entrepreneurship, according to AO.com’s chief executive.
Deliveroo’s float late last month, dubbed the “worst in London’s history”, has dealt lasting damage to the London Stock Exchange’s international reputation, setting back ambitions to make it the go-to market for tech companies post-Brexit.
John Roberts, the founder and chief executive of electricals retailer AO.com who took his own company public in 2014, has warned other technology companies to learn from Deliveroo’s IPO.
“If you’re still building and developing a business, be careful taking it to market because they don’t like the uncertainty that comes with entrepreneurship. And they value certainty,” Roberts told The Times.
Meanwhile Deliveroo is still dealing with the fallout from its IPO, seeing its share price drop another 10 per cent to new lows late last week.
Deliveroo’s own advisors had largely blamed short sellers for the 30 per cent drop in its share price it endured on the morning of its public listing, citing three major hedge funds which took a short position straight after listing.
However, new data IHS Markit has cast doubt on the impact these short sellers may have had, indicating that just 0.25 of the companies outstanding shares were shorted by traders.
IHS Markit’s director of securities finance Sam Pierson said: “This does suggest that short selling wasn’t a huge impact over the first two days of trading, when more than 100m shares traded.”
The delivery giant was also facing a backlash from its drivers, who held protests last week demanding better pay and workers rights.
On April 7 hundreds of riders held socially distanced protests in London, Reading, Sheffield, York and Wolverhampton, with more striking across Ireland, Australia, France and Spain.
The riders are demanding a living wage, access to holiday and sick pay, no more unpaid waiting times and the right to refuse unsafe work without facing penalties, all of which remained big warning signs for investors.
This morning, Deliveroo’s shares hit an all-time low at 251p per share, down from the 390p per share when it launched its IPO on March 31.