Beautiful Virgin Islands

Wednesday, Nov 12, 2025

London needed a win. Instead it got its worst IPO in history

London needed a win. Instead it got its worst IPO in history

At first glance, Deliveroo's stock market debut should have been a runaway success. The food delivery startup was a darling of the UK tech scene, and growing fast thanks to surging demand during the pandemic. Amazon recently bought 16% of the company in a major vote of confidence.

But London's biggest IPO since 2011 was an unmitigated disaster. The stock plunged when trading started on Wednesday, and the shares eventually closed 26% below their listing price, wiping almost £2 billion ($2.8 billion) off Deliveroo's initial market capitalization. The stock lost another 1.9% on Thursday.

The opening day performance marks the worst London debut for a major IPO in at least two decades, according to data provider Dealogic. One of the company's bankers told the Financial Times that it was "the worst IPO in London's history."

Why did investors shun Deliveroo when they couldn't get enough of rivals including DoorDash, which soared 85% in its Wall Street debut last year? A host of factors were behind the flop, experts say, including pricing, timing, uncertain business prospects, concerns over how the company treats workers and increased regulatory risks facing gig economy companies.

"The initial price was just incorrect," said Alasdair Haynes, the CEO of Aquis Exchange, an upstart rival to the London Stock Exchange and the CBOE. "The people with egg on the face here are the advisers," he added.

JPMorgan Chase (JPM) and Goldman Sachs (GS) were the lead investment banking advisers on the IPO. JPMorgan declined to comment. Goldman Sachs did not respond to a request for comment.

Citing "volatile global market conditions," Deliveroo had set the IPO price at the very bottom of the range it was targeting, despite insisting that it had "very significant demand from institutions across the globe." But even that was way too high for investors to stomach.

Regulatory risk


While recent stock market jitters didn't help, concerns about regulatory changes that could affect how gig economy companies pay their workers were a much bigger factor, said Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown.

Several large institutional investors, including Aberdeen Standard Investments and BMO Global Asset Management, pointed to regulatory risk and the limited rights given to Deliveroo workers when they announced days before the IPO that they would not apply for shares.

Deliveroo's listing came just two weeks after Uber (UBER) decided to reclassify all its drivers — but not its food delivery couriers — as workers, a move that could force other gig economy companies to rethink how they operate.

The decision followed a UK Supreme Court ruling that Uber drivers should be classified as workers, and not independent contractors, entitling them to minimum wage, paid vacation time and a pension.

In light of the Uber ruling, Deliveroo's practice of hiring riders as independent contractors with limited rights is "a significant financial risk for shareholders," James Bevan, chief investment officer at CCLA, an asset manager for charities and religious organizations, said in a video commentary ahead of the listing.

Forced pension contributions would compress Deliveroo's already thin margins, added Lund-Yates.

Deliveroo has yet to turn a profit, despite conditions being "as good as they have ever been" for a food delivery service, and it is losing money on most if not all deliveries, she added. "If you add that on top of the regulatory risk there's a huge question over how margins get off the ground."

Investors also expressed concerns about future growth, especially as the United Kingdom exits lockdown and customers return to dining out in restaurants.

Deliveroo also faces stiff competition from rivals Uber Eats and Just Eat Takeaway.

"We find it very difficult to understand how we can value a company that has yet to turn a profit and yet where the forward looking perspective for the business opportunity is quite so uncertain," said Bevan.

Deliveroo founder and CEO Will Shu was upbeat about the company's prospects on Wednesday, pointing to plans to invest in delivery-only kitchens and provide customers with more choice. "Our aim is to build the definitive online food company and we're very excited about the future ahead," he said in a statement.

Two classes of shareholders


Deliveroo's ownership structure may also have played a role in its icy stock market reception. It has two classes of shares, allowing its founder to retain control of the company following an IPO, which "may have been on the minds of some of the institutional investors," according to Lund-Yates.

Dual class shares are allowed on the London Stock Exchange but not for its premium segment, which provides the pool of blue-chip companies that make up indexes such as the FTSE 100 (UKX). The UK government is considering removing that restriction, despite opposition from major institutional investors.

"We have strong reservations about allowing dual class share structures into the premium segment," head of UK equities at Aberdeen Standard Investments, Andrew Millington, said in a statement shared with CNN Business. "We believe that the high standards of the premium listing segment are important to provide protection and reassurance to the many millions of individuals who have their savings invested in these companies," he added.

But there's more to the Deliveroo story. After all, many tech companies use the same structure. Brent Hoberman, the co-founder of Founders Factory, an accelerator that helps startups to grow, pointed to e-commerce company The Hut Group, whose shares soared in their London IPO last September, as an example.

Dual class shares are also common in the United States and allowed on stock exchanges in Hong Kong, Singapore and China. They are also permitted in Amsterdam, which has overtaken London as Europe's top share trading center following Brexit.

Another hefty blow to London


The Deliveroo disaster could deal another blow to London, and its renewed efforts to attract more tech company listings.

Brexit has forced banks to relocate some activity away from London, putting its undisputed position as the region's top financial capital at risk.

Finance Minister Rishi Sunak, who earlier hailed Deliveroo as a "true British tech success story," was forced to defend the company's stock market performance on Wednesday during an interview with broadcaster ITV.

"Share prices go up, share prices go down ... It's important businesses like that feel that they can stay in the UK to raise capital," he said.

That's likely to be of little consolation to the 70,000 retail investors who took part in the IPO — buying shares worth £50 million ($68.9 million). That's the biggest participation by small investors in a London listing in years, and the flop could deter them from taking part in future deals.

Hoberman is still optimistic about the outlook for tech company IPOs in London.

"This means that some of the frothier IPOs may get pulled but it won't affect high quality companies," he said. "And there's still another tech company on the [London Stock Exchange] worth over £5 billion ($6.9 billion)," he added.

That's Deliveroo, despite its dismal debut.

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
UK Upholds Firm Rules on Stablecoins to Shield Financial System
Brussels Divided as UK-EU Reset Stalls Over Budget Access
Prince Harry’s Remembrance Day Essay Expresses Strong Regret at Leaving Britain
UK Unemployment Hits 5% as Wage Growth Slows, Paving Way for Bank of England Rate Cut
Starmer Warns of Resurgent Racism in UK Politics as He Vows Child-Poverty Reforms
UK Grocery Inflation Slows to 4.7% as Supermarkets Launch Pre-Christmas Promotions
UK Government Backs the BBC amid Editing Scandal and Trump Threat of Legal Action
UK Assessment Mis-Estimated Fallout From Palestine Action Ban, Records Reveal
UK Halts Intelligence Sharing with US Amid Lethal Boat-Strike Concerns
King Charles III Leads Britain in Remembrance Sunday Tribute to War Dead
UK Retail Sales Growth Slows as Households Hold Back Ahead of Black Friday and Budget
Shell Pulls Out of Two UK Floating Wind Projects Amid Renewables Retreat
Viagogo Hit With £15 Million Tax Bill After HMRC Transfer-Pricing Inquiry
Jaguar Land Rover Cyberattack Pinches UK GDP, Bank of England Says
UK and Germany Sound Alarm on Russian-Satellite Threat to Critical Infrastructure
Former Prince Andrew Faces U.S. Congressional Request for Testimony Amid Brexit of Royal Title
BBC Director-General Tim Davie and News CEO Deborah Turness Resign Amid Editing Controversy
Tom Cruise Arrives by Helicopter at UK Scientology Fundraiser Amid Local Protests
Prince Andrew and Sarah Ferguson Face Fresh UK Probes Amid Royal Fallout
Mothers Link Teen Suicides to AI Chatbots in Growing Legal Battle
UK Government to Mirror Denmark’s Tough Immigration Framework in Major Policy Shift
UK Government Turns to Denmark-Style Immigration Reforms to Overhaul Border Rules
UK Chancellor Warned Against Cutting Insulation Funding as Budget Looms
UK Tenant Complaints Hit Record Levels as Rental Sector Faces Mounting Pressure
Apple to Pay Google About One Billion Dollars Annually for Gemini AI to Power Next-Generation Siri
UK Signals Major Shift as Nuclear Arms Race Looms
BBC’s « Celebrity Traitors UK » Finale Breaks Records with 11.1 Million Viewers
UK Spy Case Collapse Highlights Implications for UK-Taiwan Strategic Alignment
On the Road to the Oscars? Meghan Markle to Star in a New Film
A Vote Worth a Trillion Dollars: Elon Musk’s Defining Day
AI Researchers Claim Human-Level General Intelligence Is Already Here
President Donald Trump Challenges Nigeria with Military Options Over Alleged Christian Killings
Nancy Pelosi Finally Announces She Will Not Seek Re-Election, Signalling End of Long Congressional Career
UK Pre-Budget Blues and Rate-Cut Concerns Pile Pressure on Pound
ITV Warns of Nine-Per-Cent Drop in Q4 Advertising Revenue Amid Budget Uncertainty
National Grid Posts Slightly Stronger-Than-Expected Half-Year Profit as Regulatory Investments Drive Growth
UK Business Lobby Urges Reeves to Break Tax Pledges and Build Fiscal Headroom
UK to Launch Consultation on Stablecoin Regulation on November 10
UK Savers Rush to Withdraw Pension Cash Ahead of Budget Amid Tax-Change Fears
Massive Spoilers Emerge from MAFS UK 2025: Couple Swaps, Dating App Leaks and Reunion Bombshells
Kurdish-led Crime Network Operates UK Mini-Marts to Exploit Migrants and Sell Illicit Goods
UK Income Tax Hike Could Trigger £1 Billion Cut to Scotland’s Budget, Warns Finance Secretary
Tommy Robinson Acquitted of Terror-related Charge After Phone PIN Dispute
Boris Johnson Condemns Western Support for Hamas at Jewish Community Conference
HII Welcomes UK’s Westley Group to Strengthen AUKUS Submarine Supply Chain
Tragedy in Serbia: Coach Mladen Žižović Collapses During Match and Dies at 44
Diplo Says He Dated Katy Perry — and Justin Trudeau
Dick Cheney, Former U.S. Vice President, Dies at 84
Trump Calls Title Removal of Andrew ‘Tragic Situation’ Amid Royal Fallout
UK Bonds Rally as Chancellor Reeves Briefs Markets Ahead of November Budget
×