Beautiful Virgin Islands

Sunday, Mar 08, 2026

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 Dentists Returned £1.3 Billion to Government as Shift Toward Private Care Accelerates
Expert Warns UK Must Build Emergency Food Stockpiles to Prepare for Climate Shocks or War
UK Plans Charter Flight to Evacuate British Nationals from Gulf as Regional Conflict Disrupts Air Travel
Families of Zimbabwe’s Liberation Fighters Call on Britain to Help Locate Skulls Taken During Colonial War
Iran’s Ambassador Warns Britain to ‘Be Very Careful’ Over Deeper Role in Expanding Middle East War
UK Military Leadership Defends Britain’s Defensive Role in Expanding Middle East Conflict
Four U.S. Strategic Bombers Arrive in Britain as Iran War Intensifies
Soham Murderer Ian Huntley Dies After Violent Attack in High-Security Prison
UK Lawmakers and Experts Condemn Scale of Overseas Human Remains Held in British Museums
Royal Navy Aircraft Carrier HMS Prince of Wales Placed on Standby for Potential Deployment
United Kingdom Confirms U.S. Military Using British Bases for Operations Targeting Iranian Missile Sites
Starmer Defends UK Role in Iran Conflict After Renewed Criticism from President Trump
Blue Owl Reveals £36 Million Exposure After Collapse of UK Lender Serving Wealthy Clients
UK Asylum Reform Plan Triggers Fierce Debate Over Border Control and Humanitarian Impact
US Stealth Bombers Head to UK Base as Trump Issues Stark Warning to Iran
UK Deputy Prime Minister Says Legal Case Could Exist for British Strikes on Iranian Missile Sites
Investigators Link Mysterious Parcel Fires Across Europe to Russian Intelligence Operation
Debate Intensifies Over Britain’s Legal Justification for US Military Operations Launched From UK Bases
Britain Faces Heightened Energy Price Risks as Iran-Linked Tensions Threaten Global Oil and Gas Supplies
British Counter-Terror Police Arrest Four Suspected of Spying on Jewish Community for Iran
Axel Springer Agrees $770 Million Deal to Acquire Britain’s Daily Telegraph
Iceland Supermarket Drops Trademark Challenge Against Icelandic Government in Long-Running Naming Dispute
UK Defence Secretary Visits Cyprus Following Scrutiny of Britain’s Response to Drone Attacks
Questions Grow Over Britain’s Military Readiness as Response to Iran Conflict Draws Scrutiny
UK Offers Failed Asylum Seeker Families Up to Forty Thousand Pounds to Leave Voluntarily
Saharan Dust Could Bring ‘Blood Rain’ to Parts of the UK as Weather Systems Shift
UK Deploys Additional Typhoon Fighter Jets to Qatar and Helicopters to Cyprus Amid Rising Middle East Tensions
Experts Urge Britain to Accelerate Renewable Energy Push as Global Conflicts Drive Up Costs
British Public Shows Strong Reluctance to Join Wider War in Iran
First UK Evacuation Flight Departs Middle East After Lengthy Delay
United Kingdom Imposes New Visa Requirements on Travelers from St. Lucia and Nicaragua
Iran Conflict Strains U.S.–U.K. Alliance as Trump and Starmer Clash Over Military Strategy
UK Interest Rates Could Rise Above Four Percent Again if Energy Shock Continues, Think Tank Warns
Starmer Defends Britain’s Iran Strategy as Badenoch Urges Stronger Military Support
Labour MP Says She Saw No Sign Husband Broke Law After Arrest in China Espionage Investigation
UK Jobless Rate Overtakes Italy’s for First Time in Years as Labour Market Weakens
United Kingdom Suspends Student Visas for Four Countries in Unprecedented Immigration Move
Campaigners Warn UK Student Visa Ban Could Push Migrants Toward Dangerous Channel Crossings
First U.K. Charter Flight for Stranded Nationals Set to Depart Oman Amid Middle East Crisis
France and United Kingdom Deploy Warships to Eastern Mediterranean as Middle East Conflict Escalates
U.K. Arrests Three Men Including Lawmaker’s Partner in Suspected China Espionage Investigation
Trump Says UK–US ‘Special Relationship’ Is Diminished Amid Middle East Dispute
UK Economic Forecasts Face Fresh Strain from Middle East Conflict and Rising Energy Costs
UK Reaffirms Close US Ties After Trump’s Public Criticism
Reeves Stresses Stability and Fiscal Discipline in UK Budget Update as Growth Outlook Shifts
UK Deploys Royal Navy Destroyer HMS Dragon to Cyprus After Drone Strike on RAF Base
Green Party Surges Past Labour in New UK Poll as Traditional Party Support Crumbles
Majority of Britons Oppose U.S. Use of UK Military Bases in Iran Conflict
UK Intensifies Evacuation Efforts from Oman, Working with Airlines to Boost Flight Capacity
Trump Condemns UK and Spain in Unusually Sharp Rift Over Iran Military Action
×