Deliveroo stock plunges 30 percent in IPO
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Deliveroo's initial public offering (IPO) was a bust as its shares plummeted 30% in their debut on the London Stock Exchange. They started trading at 8 a.m. London time today under the ticker "ROO." Deliveroo's IPO was hit by worries about how it treats its drivers, its governance and its valuation.
Deliveroo plunges in IPO
According to CNBC, Deliveroo stock plunged 30% from the issue price in the IPO before trimming some losses. The British food delivery start-up set its share price at £3.90 on Tuesday, which was at the bottom of its IPO target range and implied a market value of £7.59 billion.
Data from Reuters showed that Deliveroo's stock price fell as low as £2.73 per share when conditional trading started this morning on the London Stock Exchange. The decline wiped about £2 billion from the Amazon-backed company's valuation. However, it's still early enough that Deliveroo could cancel its IPO and void all trades made until unconditional trading starts Apr. 7.
The company is selling more than 284 million shares, putting the size of its offering at about £1.5 billion. Of that total, £1 billion will go to Deliveroo itself, while £500 million will go to existing shareholders. Amazon and Deliveroo co-founder and CEO Will Shu are among those who will receive the largest amount from the IPO.
Goldman Sachs and JPMorgan led the listing, and Bank of America, Citi, Numis, Jefferies and Bank of America Merrill Lynch also participated. Retail investors can't trade Deliveroo stock until after conditional trades wrap up on Apr. 7.
Problems for the start-up
Hargreaves Lansdown analyst Sophie Lund-Yates told CNBC that the plunge in Deliveroo's IPO "isn't hugely surprising given the substantial background noise surrounding the company." She added that the largest issue is regulation involving the rights of workers. Deliveroo's flexible employee model is a central pillar of its plans for success.
The start-up's IPO offer is the biggest in the U.K. since e-commerce giant The Hut Group raised £1.88 billion in September. Based on market capitalization, Deliveroo's listing is the largest IPO in London since Glencore's offering almost 10 years ago. It is also the U.K.'s biggest-ever tech listing by value, coming out ahead of The Hut Group and World Pay, which debuted in 2015 before being delisted.