The European delivery platform in which Amazon has invested a lot of money, Deliveroo, finally hit the stock market through the London Stock Exchange but just a few hours after its Initial Public Offering (IPO), the value of its shares has already plummeted by more than %30. The figure represents more than 2.8 billion pounds sterling, about 3.8 million dollars.
Deliveroo was clearly shaping up for a less-than-positive debut. Experts point out that, at 390 pence per share, the initial valuation of the delivery platform was the equivalent of about $10.46 billion. This figure is at the lowest estimates expected for the IPO. And just a few minutes later, it had already lost almost a third. At the lowest point, its shares were worth just 271 pence.
Deliveroo’s IPO was boasted by UK authorities as a “true British tech success story.” However, several investment firms, since before the debut, had decided to ignore the company’s shares. This, following several concerns about the stability of the collaborative economy. Experts interviewed by the agency point out that this will be the last “old-world COVID-19” debut.
It is not entirely surprising that Deliveroo’s IPO is being so poorly received by the markets. And not just because the big investment companies decided that they were not going to be part of the IPO. There had already been several phenomena that did not look very good for the platform. In early March the platform boasted remarkable growth in the midst of the pandemic. Even so, it revealed a loss of $307.66 million dollars annually in 2020.
Also, as mentioned above, the controversy surrounding the sharing economy is said to have played a crucial role in Deliveroo’s dismal debut. Several funds and investment firms were beginning to take Corporate Social Responsibility (CSR) issues more seriously. Something in which the delivery platform is technically failing, as it does not even offer its employees minimum pay, vacation bonus, or sick days.
Deliveroo itself seemed to be aware, in part, that its debut was not going to be as good as it had hoped. Prior to its IPO, the brand reduced the price range it expected for its IPO. While it was always kept at 390 pence per share as the lowest expected range, at the high end it had a valuation of 460 per unit. A figure that was cut by 11 percent just a couple of days ago, prior to the debut.
It’s hard not to draw parallels between the European delivery platform and global market leader Uber. In 2019, the taxi-sharing app launched and had an IPO that immediately turned into a flop. Not only that, but massive losses continued for several days afterward. Something that can probably be repeated for Deliveroo. Something unfortunate for a company that once had a lot of promise in the sector.
It should be recalled that only last August, it was announced that the UK authorities gave the go-ahead to Amazon to invest in Deliveroo. This transaction had been in the works since May 2019 but was pending approval due to competition issues. Once the operation was allowed, Bezos’ platform was given 16 percent of the delivery app. Something that, at the time, was seen as a triumph for the retailer.
