Hopes of Deliveroo rebound evaporate as shares slide further
Any hopes of a rebound in Deliveroo’s share price quickly dissipated today as the delivery firm dipped even further.
It was a disastrous first day of trading for Deliveroo which plunged as much as 30 per cent, wiping £2bn off its valuation.
The delivery platform’s shares closed out their first day down 26 per cent to 287p, a sharp drop from the 390p offer price.
This morning it dipped more than 3.5 per cent but it has since clawed back some of the losses to trade down 0.87 per cent to 284p.
Deliveroo was forced to slash its offer price in the days leading up to its market debut after a series of fund managers expressed concerns over the firm’s economics and working conditions for its delivery drivers.
Even with the revised valuation of £7.6bn there were concerns Deliveroo, which still has not made a profit, is still overvalued.
It had been widely hailed as the City’s biggest float this year in what had looked to be a bumper year for the City’s IPO market.
“Not all stocks have a happy start to life on the stock market – just ask Tim Steiner or Mark Zuckerberg – but it’s not a great advert for London as a destination for tech listings,” Neil Wilson, chief markets analyst at Markets.com said.
All is not lost for Deliveroo though given two of its largest investors – T Rowe Price and Fidelity – did not sell any shares yesterday.
“The stock market can be a fickle friend. Sometimes it can give you instant gratification; sometimes you have to hang on for the ride and sometimes you’ll wish you’d never jumped on in the first place,” Russ Mould, investment director at AJ Bell said.
“Clearly investors saw an opportunity in Deliveroo and that hasn’t disappeared. This is a business that has a point to prove. Anyone really looking at its credentials in recent days couldn’t miss that. What’s changed is that now the business needs to prove it quickly and publicly.”