Deliveroo shares rise 3.9% as retail investors start trading

Deliveroo shares gained as much as 3.9 per cent on Wednesday, when retail investors began trading a week after the company's disastrous debut on the London Stock Exchange.

The British food delivery start-up’s stock rose in early trading before dropping 3.21 per cent at 9.53am London time, pricing the shares at £2.89 ($4). The stock closed at £2.86, up 2.14 per cent.

This is far below its £3.90 float price after its shares collapsed 26 per cent in a crash that wiped more than £2 billion off its value.

The company faces another challenge as hundreds of delivery riders are set to protest in the UK on Wednesday to lobby for better working conditions.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said retail investors "don’t appear to have lost their appetite for Deliveroo, despite the severe bout of indigestion suffered by the company when institutional investors began trading last week.

"This will be some comfort for Deliveroo customers who were encouraged to buy a slice of the company but appeared to have thrown the dice on a disastrous debut," she said.

"Like a fateful round of Monopoly, they were locked out of selling their shares for a week while the company’s initial valuation fell sharply. Now they finally have a ‘get out of jail’ card, but it seems for now that many have kept it in their back pocket, waiting it out for prices to stabilise."

Deliveroo listed on the London Stock Exchange with a valuation of £7.59bn on March 31, in the largest initial public offering in the UK capital for a decade.

Warning signs behind Deliveroo’s ‘disastrous’ stock market debut

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The app-driven meals delivery group raised £1.5bn in the IPO, with its offering priced at £3.90 per share, the bottom of its target range. However, the share price closed down at £2.87 on the first day of trading, valuing the company at £5.23bn.

The disastrous debut was plagued by criticism, with institutional funds deterred by its dual-class share structure that allows co-founder and chief executive Will Shu to retain control of the business for three years, as well as the company's gig-economy model.

On Wednesday, scooter and bicycle delivery riders waving flags and red smoke flares rode through the streets of central London with protests also planned in York, Reading, Sheffield and Wolverhampton.

The Independent Workers' Union of Great Britain, representing the riders, is calling for them to be paid the minimum wage, currently £8.91 per hour for over-23s, and for further safety protections.

Deliveroo said that “this small self-appointed union does not represent the vast majority of riders who tell us they value the total flexibility they enjoy".

Rider surveys found most are happy with the company and flexibility was their priority, the company said in a statement.

Earlier in the day, analysts said Deliveroo customers who bought shares last week could look to sell them today, increasing the company’s losses.

Ms Streeter said IPOs must be priced more accurately to maintain retail investors’ enthusiasm.

"The offering, at £3.90 a share, gave Deliveroo a valuation of around £7.6bn, sharply above its valuation of around £5bn in January following an investment round, yet there had been no fundamental improvements to its prospects," she said.

“Instead, the flotation came at a time of increasing concerns surrounding its gig-economy model and the expectation that the easing of Covid restrictions could lead to an initial downturn in business.”

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England squad

Moeen Ali, James Anderson, Jofra Archer, Jonny Bairstow, Dominic Bess, James Bracey, Stuart Broad, Rory Burns, Jos Buttler, Zak Crawley, Sam Curran, Joe Denly, Ben Foakes, Lewis Gregory, Keaton Jennings, Dan Lawrence, Jack Leach, Saqib Mahmood, Craig Overton, Jamie Overton, Matthew Parkinson, Ollie Pope, Ollie Robinson, Joe Root, Dom Sibley, Ben Stokes, Olly Stone, Amar Virdi, Chris Woakes, Mark Wood

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Al Ain 3 (Ahmed 02’, El Shahat 17’, Al Ahbabi 60’)

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Score

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Pakistan 219 all out in 47.2 overs

New Zealand win by 47 runs

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Next match: Zayed Cricket Stadium, Abu Dhabi, Friday

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The bio

Date of Birth: April 25, 1993
Place of Birth: Dubai, UAE
Marital Status: Single
School: Al Sufouh in Jumeirah, Dubai
University: Emirates Airline National Cadet Programme and Hamdan University
Job Title: Pilot, First Officer
Number of hours flying in a Boeing 777: 1,200
Number of flights: Approximately 300
Hobbies: Exercising
Nicest destination: Milan, New Zealand, Seattle for shopping
Least nice destination: Kabul, but someone has to do it. It’s not scary but at least you can tick the box that you’ve been
Favourite place to visit: Dubai, there’s no place like home

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