Deliveroo loses £2bn within 20 minutes of being listed on stock exchange

The company has come under fire for its record on workers’ rights. (Photo: Getty)

Deliveroo shares have plummeted by more than 30 per cent after it listed publicly on the London Stock Exchange, amid criticism for its record on workers’ rights.

The food delivery company was initially valued at £7.6 billion, and hoped listing in London, rather than New York or Amsterdam, could help kickstart a raft of British tech companies listing in the UK.

But those hopes were quickly shattered, as food delivery app Deliveroo shares dropped to 271p within the first 20 minutes of trading, far below the bottom of its target range of 390p.

Deliveroo has come under fire for its alleged poor pay and working conditions for riders, as well lack of benefits. The company contends that riders are ‘self-employed’ and can choose their own hours.

Canadian BMO Global Asset Management, which manages £692 billion of assets, said last week it would not be investing in the food delivery service, in part because of the company’s labour practices.

Aberdeen Standard and Aviva Investors, two UK-based companies that manage more than £800 billion of money combined, also announced they were put off by the working conditions for riders.

However, Deliveroo fought back against rumours of investor scepticism and claimed earlier this week that it had seen ‘very significant demand’ from many investors.

Despite the drop in value, Deliveroo still managed to raise £1.5 billion in share capital, giving investors a £500 million windfall and affording the company more than £1 billion to invest in ‘new growth initiatives’.

Deliveroo’s largest investor, Amazon, sold around £91m of shares in the public offering, while chief executive Will Shu made around £26m.

The London-born company hoped to prove the success of launching on the London stock exchange, rather than New York or Amsterdam – but the poor performance could be a warning to other Silicon Valley-style firms in Britain thinking of doing the same.

‘I am very proud that Deliveroo is going public in London — our home,’ said Will Shu.

‘Our aim is to build the definitive online food company and we’re very excited about the future ahead.’

The app-based food delivery service was founded in London in 2013, and has rocketed in growth since. Still, the firm lost £224m last year, even as revenues jumped 54 per cent from a lockdown-related boost in orders.

Deliveroo has been contacted for comment.

MORE : Big investors back away from Deliveroo over its record on workers’ rights

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