“An Absolute Car Crash” – Deliveroo Shares Tumble 31% In London IPO
TYLER DURDEN, 31 March 2021
In what some might take to be the latest sign of exhaustion in global equity markets, shares of Deliveroo tumbled 31% in their market debut Wednesday after pricing at the lower end of their range.
Despite pricing near the bottom of its range, Deliveroo’s opening valuation of about £7.6 billion ($10.5 billion) was the highest in London since resources group Glencore’s 2011 IPO, according to Dealogic data.
But traders quickly wiped more than £2 billion ($2.8 billion) off its market cap as shares plunged. It’s a start contrast to the debut of DoorDash, which IPO’d in the US back in December. Its shares soared more than 86% at the open. One equity capital markets banker who was not involved in the deal described the debut to the FT as “absolute car crash”. In recent days, Deliveroo and its bankers had continued to insist that the offering had seen “very significant demand” from investors, even as its debu tprice range started to slip.
Of course, after the offering failed so spectacularly, a flurry of Wall Street analyst reports hit the tape offering explanations for the flop. Despite the lingering hype for ‘stay at home’ stocks (although the restrictions in England have started to unwind, it will be months before people and businesses can function normally), analysts cited ‘ESG concerns’ as the primary reason for the epic flop.
Institutional investors are apparently worried about “the sustainability of food delivery growth post-pandemic” as concerns about labor-market reforms saddling it with more costs eat away at investor interest. The firm also faces stiff competition from rivals like Just Eat Takeaway and Uber Eats.
