Deliveroo’s shares plunged by as much as 30 percent in their trading debut today, wiping off more than $3 billion from the company’s valuation.
The company’s highly anticipated listing, which British finance minister Rishi Sunak hailed as a “true British tech success story” that could pave the way for other companies, was the largest in the London market in a decade.
However, the listing’s debut has been shunned by Britain’s largest investment firms, including Aberdeen Standard Life, Aviva, Legal & General Investment Management and M&G, over the company’s share structure and the state of the gig economy in the country, Reuters reported.
“Investors are turning away from the work-at-home play and putting their money into the economic recovery play. Deliveroo got caught in the middle of a huge rotation. It was the last IPO of the old COVID world,” said Fabian de Smet, head of investment banking at Berenberg.
Investors’ muted enthusiasm comes despite the performance improvements the company has seen since the start of the pandemic. The company said it narrowed its underlying loss to $309 million, down from $438 million in 2019.
“That comes back to the issue that how could a company that was valued at 3 billion (pounds) in November, 5 billion in January, be magically worth 8-9 billion in March – particularly when according to its own statements it was potentially in need of emergency funding last year,” Russ Mould, Investment Director at AJ Bell told Reuters.
Deliveroo was founded by William Shu in 2013. The company’s IPO was the biggest tech float on London Stock Exchange since Glencore’s in May 2011.