Deliveroo Shares Plunge in London IPO
Shares of food-delivery startup Deliveroo dropped as much as 30% on their first day of trading, as investors shunned a landmark offering from the Amazon-backed firm amid concerns about its profitability.

✒ Shares in Deliveroo Holdings dropped as much as 30% on their first day of trading in London. Possible reasons:

  1. Dual share structure: shares held by CEO Will Shu have 20 times the voting power of others
  2. Regulatory concern: the Supreme Court ruling on Uber’s case means Deliveroo’s “riders” may end up costing as much as “workers” or even “employees”
  3. Fading pandemic edge: as vaccines start to work and lockdowns are eased, demand for delivery will inevitably fall
  4. Valuation: the company’s £7.6bn valuation was simply too much to ask for a lossmaking company that operates in a market with few barriers to entry

Another possibility is Deliveroo’s choice of where to float its shares. US markets (Nasdaq, NYSE) are used to seeing unprofitable tech companies soar. Deliveroo’s listing is a litmus test for the appetite in the London market, a reflection of its acceptance of these growth-obsessed startups.