The books were covered, it was just plain mis-priced. Negative stories about Deliveroo in recent days have also dampened demand (one survey found a third of the riders received less than the legal minimum hourly wage for over-25s)īut ultimately, the firm was overpriced at £7.6bn, or 390p per share, Wilson explains:Ĭhiefly though it reflects the fact that even pricing the IPO at the bottom of the range, Deliveroo was demanding too high a price tag for a loss-making delivery platform in a very competitive space with a questionable path to profitability. Old City habits die hard, despite what the FCA wants to do. Will Shu could have avoided that by going for a premium listing and eschewing the tech stock desire for a dual-class structure that leaves power with the founder. Plus, many large investors had concerns over Deliveroo’s working practices and governance.Ī lot of the big UK funds are not on side, which was failure number one. He blames several factors - including the City’s wariness of the ‘dual-class’ share structure which gave founder Will Shu more power than other shareholders. Shares in Deliveroo got off to a horrible start on the market, says Neil Wilson of. 10.10 CEST Analyst: Loss-making Deliveroo was mispriced The longer-term outlook depends on how demand holds up in a post-pandemic world, and if that road to profitability looks any clearer.” The pandemic has offered a structural growth opportunity, but it’s worth asking if lockdowns mean things are as good as they will ever be for a takeaway service. investors must wonder whether demand for takeaways will hold up once the Covid-19 lockdowns are over, Lund-Yates adds: Sadly for the group, anxiety doesn’t tend to inflate share prices.Īlso. Throw in the recent developments at Uber, and general market volatility, and the net effect is one of increased anxiety. If forced to offer more traditional employee benefits, like company pension contributions, Deliveroo’s already thin margins would struggle to climb, and the road to profitability would look very tough indeed. The flexible employee model of Deliveroo’s riders is a huge pillar of the group’s plans for success. The biggest concern is regulation around worker rights. More here: Deliveroo tumbles 30% in London debut Yet retail investors, who had been allocated £50m worth of stock in the IPO that was marketed within the Deliveroo app, will be unable to trade until next Wednesday, when unconditional dealings begin. The initial public offering had given Deliveroo an opening valuation of around £7.6bn, the highest in London since resources group Glencore’s 2011 IPO, according to Dealogic data.īut the food delivery app quickly shed more than £2bn in market value in its first moments as a public company, in one of the sharpest drops for a major new listing in years.Īs recently as Tuesday, Deliveroo had insisted that it had seen “very significant demand” from investors and the deal had been covered “multiple times”, even as it moved to lower its pricing range earlier this week.ĭeliveroo sold shares worth £1.5bn in the offering, raising gross proceeds of around £1bn for the company to invest in new growth initiatives such as its Editions network of delivery kitchens, while existing investors will cash in to the tune of £500m. The Financial Times also reckons Deliveroo’s shaky debut is a blow to ambitions to lure more British tech companies to list in the UK. 10.50 CEST FT: £2bn wiped off Deliveroo in moments.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |