LONDON – Shares of app-based meal delivery service Deliveroo, which saw its business boosted by pandemic lockdowns, tumbled by as much as a third in their U.K. stock market debut on Wednesday.
The London-based company's shares slid even after they were priced at the bottom of the potential range, reflecting investor wariness about whether Deliveroo could turn a profit and broader market turbulence for tech-related stocks.
The slump also reflects a growing backlash against “gig economy" companies, with half a dozen leading U.K. fund managers abstaining from the IPO amid concerns about working conditions for Deliveroo's delivery riders, and its shareholder structure.
Shares in Deliveroo Holdings, which competes with Uber Eats and whose backers include Amazon, ended the day down 26% from their offer price of 390 pence, after falling as much as a third in early trading.
Deliveroo's initial public offering was one of Europe's biggest and most hotly anticipated this year. The company raised 1 billion pounds ($1.4 billion) from selling new shares, while existing shareholders sold another 500 million pounds worth of shares, in a stock market listing that values the company at 7.6 billion pounds.
Founded by CEO Will Shu, an American ex-banker, Deliveroo operates in a dozen countries in Europe and Asia. Every month more than 6 million customers order food from restaurants and shops through the Deliveroo app, according to its prospectus.
Bicycle and scooter riders lugging insulated bags in the company’s signature robin’s egg blue are ubiquitous on the streets of London.
“In this next phase of our journey as a public company we will continue to invest in the innovations that help restaurants and grocers to grow their businesses, to bring customers more choice than ever before, and to provide riders with more work,” Shu said in a statement.