Beautiful Virgin Islands

Wednesday, Jul 22, 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
Miliband Sets Climate and International Law at Centre of UK Diplomacy
US Gasoline Returns to $4 as Renewed Iran Fighting Disrupts Oil Flows
Czech Central Bank Governor Rejects Early Euro Entry and Rate-Cut Pressure
Trump Orders 50% Tariffs on Selected Canadian Imports
Pentagon Discloses Nearly 100 US Troop Injuries During Renewed Iran Fighting
Trump Readies New Tariffs as Temporary Global Levy Nears Expiry
EU Imposes Record €550 Million Digital Services Fine on AliExpress
London’s Housing Starts Collapse as Planning and Building Costs Stall Development
Charlie Sheen’s Daughter: "My Dad Didn’t Buy Me a House, My Breasts Bought It"
Vivienne Westwood Casts Cicciolina, 74, in Its New Autumn Campaign
Dejavu: Germany’s Military Expansion Reshapes Europe’s Strategic Balance With France
Naturally Conceived Identical Quadruplets Born in Rare Brisbane Delivery
Tate Brothers Fight British Extradition Bid After Miami Arrests
Burnham Reshapes Britain’s Government Around Living Costs, Devolution and Security
Jingye Demands Full Compensation After Britain illegally Nationalized British Steel
Just Another Liar or a Robin Hood? Andy Burnham Pledges Cost-of-Living Help in First Speech as UK Prime Minister
Morgan Stanley Builds a Wall Street Lead in AI Infrastructure Finance
High Prices Push Coffee Drinkers Toward Whole Beans and Home Brewing
Trump Draws Boos and Podium Scrutiny at Spain’s World Cup Triumph
Brilliant move: Péter Magyar Moves to Nominate Chess Grandmaster Judit Polgár as Hungary’s President
Spain Defeats Argentina in Extra Time to Win Second World Cup
Police Block Cockroach Janta Party’s March to Parliament as Education Protests Intensify
Current AI Seeks to Build an Open Global AI Infrastructure Outside Big Tech Control
Turkey Explores S-400 Transfer to UAE in Bid to Rejoin F-35 Program
Germany’s Economic Malaise Reopens the Sunday Shopping Debate
Singapore Considers Lower Taxes for Fund Managers as Hong Kong Intensifies Talent Contest
US Retaliates Against Iran After Two American Troops Killed in Jordan
Bank of Asia BVI Enters Court-Supervised Liquidation After Regulators Find It Insolvent
Proposed U.S.-Saudi Nuclear Pact Could Permit Limited Uranium Enrichment Under International Safeguards
Netherlands Declares Water Shortage Emergency After Drought Pushes Rivers to Historic Lows
Why Kentucky Fried Chicken Became KFC—and Why the False Explanations Persist
Iran Claims It Destroyed Bahrain’s Main Artificial Intelligence Center in Missile and Drone Strike
Ukrainian Drones Strike Wildberries Warehouses Deep Inside Russia
Brothers Andrew and Tristan Tate Who Turned "Toxic Masculinity" Into a Brand Arrested in Miami as Britain Seeks Their Extradition
Reported CIA Mission Helped Clear the UAE’s Path to Advanced US AI Chips
Artificial Intelligence Capital Fuels Markets While Governments and Regulators Face Mounting Strategic Tests
China’s Moonshot’s Kimi K3 Narrows the Gap With Anthropic Through Scale, Openness and Lower Cost
Gold and Cash Seizure Puts Indonesia’s Senior Anti-Corruption Prosecutor Under Investigation
The Ledger Will Not Trust on Faith
Trump Administration Pressures Banks to Restrict Financial Access for Undocumented Immigrants
Passenger Bound for Germany Refused to Sit Beside a Woman on a Plane — Then Slapped a Flight Attendant
Ukraine’s Leadership Rift Spills Into the Streets as Protesters Target Army Chief
Ukrainian Drone Barrage Kills Eight and Strikes Russian Logistics Network
The Ten World Cup Finals That Defined Football History
Smartphones Are Getting More Expensive, Sales Are Collapsing, and Even Apple Admits: "Prices Will Rise"
The Monaco Bombing Has Become a Test of Ukraine’s Intelligence Accountability
Leadership Change and Strategic Rivalry Redraw the Political Map
Energy Risk, Uneven Growth and the New Geography of Global Capital
The AI Race Enters Its Infrastructure Era
For 36 Years, He Scammed About 300 Luxury Hotels — Until He Was Caught
×