Deliveroo shares have opened far below the expected price after investors spurned the company.
The sale of “Deliveroo” is the biggest stock market in London for a decade, and the sharp drop in its first trading day is a blow to the UK’s ambitions to persuade more large tech companies to enrol in the UK.
Many UK investment fund managers recently stated that they would not buy shares at Deliveroo , citing concerns about the working conditions of its ‘runners’ (delivery contractors) and the lack of investor power.
“Initially, there was a lot of fanfare about the company, supported by Amazon, which put its shares at the disposal of the public, including the ability of customers to buy shares. Unfortunately, the story took a turn for the worst when multiple fund managers came and said they would not come back to the company because of concerns about work practices.”, commented AJ Bell investment director Russ Mould.
Neil Wilson, a market analyst for Markets.com, said “even on the price of the initial public offering at the bottom of the range, Deliveroo was asking for too high a price for a loss-making platform in a very competitive space with a questionable path for profitabilit.”
“In this next step of our journey as a public company, we will continue to invest in innovations that help restaurants and grocery stores grow their businesses, offer customers more choice than ever before, and provide more work to the runners,” Deliveroo CEO WIll Shu said. Shu’s shares give him 20-times the voting power of other investors.