In this file photo dated Monday Feb. 15, 2021, a Deliveroo food delivery worker pushes his bike in front of restaurant in Paris. Shares in the app-based meal delivery service Deliveroo tumbled by as much as a third in their U.K. stock market debut on Wednesday March 31, 2021. (AP Photo/Francois Mori, FILE)
LONDON (AP) — Shares of app-based meal delivery service Deliveroo, which saw its business boosted by pandemic lockdowns, tumbled by as much as a third in their U.K. stock market debut on Wednesday.
The London-based company's shares slid even after they were priced at the bottom of the potential range, reflecting investor wariness about whether Deliveroo could turn a profit and broader market turbulence for tech-related stocks.
Demand was also hurt after at least six leading U.K. fund managers said they would abstain from investing amid concerns about working conditions for the company's delivery riders and its shareholder structure.
Shares in Deliveroo, which competes with Uber Eats and whose backers include Amazon, were down as much as 30% in early trading from their offer price of 390 pence.
Still, Deliveroo's initial public offering is one of Europe's biggest yet this year. The company said it raised 1 billion pounds ($1.4 billion) from selling new shares, while existing shareholders sold another 500 million pounds worth of shares, in a stock market listing that values the company at 7.6 billion pounds.
Deliveroo was founded by American ex-banker Will Shu and operates in a dozen countries in Europe and Asia. Every month more than 6 million customers order food from restaurants and shops through the Deliveroo app, according to its prospectus.
Bicycle and scooter riders lugging insulated bags in the company's signature robin’s egg blue are ubiquitous on the streets of London.
Deliveroo was a big beneficiary of the the coronavirus pandemic. Lockdown restrictions sent demand for takeout food soaring and increased its overall transactions, but analysts wonder if the lift will last.
“The pandemic has offered a structural growth opportunity, but it’s worth asking if lockdowns mean things are as good as they will ever be for a takeaway service," Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown, said in a research note. "The longer-term outlook depends on how demand holds up in a post-pandemic world, and if that road to profitability looks any clearer.”
Deliveroo has never turned a profit since it was founded in 2013, and it lost more than $300 million last year.
Some of the U.K.’s biggest fund managers lost their appetite for Deliveroo shares because of its use of “gig economy" workers.
One fund manager, M&G, voiced concerns about Deliveroo's reliance on gig workers, saying it presented a risk to “the sustainability of its business model."
Having a flexible workforce has been key to the company's success, but the threat of tighter regulation looms. The U.K.s' top court recently ruled that Uber drivers should be classed as “workers" and not self-employed, entitling them to benefits such as minimum wage and pensions.
For all of AP’s tech coverage, visit https://apnews.com/apf-technology
Follow Kelvin Chan at www.twitter.com/chanman
Featured Article: What are the Benefits of Index Funds?
7 Stocks to Support Your New Year’s Resolutions
After a year like 2020, many Americans figure that just getting to 2021 was enough. But for many people, the start of a new year still means making resolutions. And while many Americans are still waking up to Groundhog’s Day, there is hope that things will look dramatically different in September than they do right now.
Some of the most popular resolutions include losing weight, exercising more, or taking steps to get our life and/or business more organized. And many pure-play companies lean into these trends and are doing well.
As an alternative to this, you can also invest in companies that are not pure plays but can still benefit from consumers looking to start fresh. Owning these stocks helps you manage your risk. If the trend holds, you can ride the wave. On the other hand, if the wave turns into a ripple, the stocks have other catalysts to get them through.
In this special presentation, we’ll take a look at both of these categories. We’ve got several pure-play companies that let investors buy stocks in companies benefiting from these trends. We’ll also give you a few stocks that fall in the latter category.
These are stocks that you might buy at any time and for many reasons. However, they present excellent buys as the new year begins.
View the "7 Stocks to Support Your New Year’s Resolutions"
Companies Mentioned in This Article
Compare These Stocks
Add These Stocks to My Watchlist