Business & Investment

Deliveroo IPO blunder makes small investors a bad taste By Reuters

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© Reuters.File photo: deliveryoo delivery driver bikes through the center of Manchester

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Elizabeth Howcroft and Abinaf Ramnarayan

London (Reuters)-London-based amateur trader Amy Lee wasn’t sure if she would buy stock at Deliveroo’s stock market debut, but was swayed by a food delivery company’s app advertising campaign. I finally decided to make a leap.

“I gambling,” she said. “It was my own fault, but I think I was upset by the idea that Deliveroo wouldn’t advertise bad products to customers through the app. Is that ridiculous?”

Lee and others, who were allotted a total of £ 50 million ($ 69 million) in stock, suffered paper losses after Deliveroo’s stock plunged 30% on Wednesday’s London Stock Exchange debut. I am.

This fall, a £ 2 billion cut from its original valuations, has hit Britain’s ambitions to attract fast-growing tech companies to London.

It can also question retailers’ willingness to invest, especially in initial public offerings (IPOs). This was the first time a British individual had the opportunity to participate in the action on the first day.

Deliveroo called the campaign “great food with a share.”

But things didn’t go well even before the IPO. Some asset managers have avoided it because of concerns about gig economy working conditions and Deliveroo’s corporate governance.

Many amateurs discussing this issue on the online Reddit forums give similar reasons for a clear steering.

Since buying £ 250 worth of stock, Lee has done more research, giving money to “like another greedy tech company that lacks the willingness to change social values ​​and the way things are done.” “I’m angry,” he said.

But she can’t sell until April 7th. This is due to the rules regarding “conditional trading”. This is a London IPO, a practice that usually lasts a week before a stock is “settled.”

A spokesman for Primary Bid, a platform that allows retail investors to participate in large-scale stock sales, said this was revealed to clients at every stage.

A Londoner who bought £ 295 of Deliveroo shares said the company’s sales team seemed to be “backtracking” to turn their diet into investors.

“Every time I placed an order for Deliveroo, they flashed a sign. They let me invest without an intermediary account. They opened a LON: (bank) account and yours. He said he would do it for. A one-time charge of £ 5. They helped it a lot, “he said requesting anonymity.

A Deliveroo spokeswoman was asked to comment, saying, “The deal started lower than I expected, but I’m just starting to live as a publicly traded company, and our winning proposal brings long-term value to all shareholders. I’m sure. “

“We thank each customer who participated in our customer offer and make a tireless effort for them every day.”

Deliveroo’s share price recovered slightly from Wednesday’s lows, but performance on the first day was the worst for a London IPO of over £ 1bn, according to market platform Deliveroo.

Democracy

Individual investors can be hooked on other market debuters as many trading companies, including the Robinhood app, want to “democratize” their IPOs by not limiting allocations to institutional investors only. ..

PrimaryBid is discussing with other list candidates, sources familiar with those discussions told Reuters.

The company collects orders from individuals and bids on transactions in bulk.Bankers say it is becoming an influential participant and is involved in financing transactions from tech company Ocado (LON :) and catering companies. Compass group (LON :).

PrimaryBid estimates that retail ownership is about 15% of the UK stock market. This is because many people stay home in a pandemic and take extra cash to stake in trading app stocks.

UK amateur participation has increased from 10% in 2009, but lags behind US 25% -30% levels.

Still, some, including London-based primatologist Sam Elliott, confessed to being “obsessed” with the stock market following the enthusiasm of US video game retailer GameStop (NYSE :) in January. are doing.

He has invested £ 250 in Deliveroo and has “eradicated” the fall in stocks, but intends to hold it in the long run.

Another investor (and former Deliveroo courier) has also committed £ 250. This is the amount he said he could afford to lose.

“The price cuts made me a little worried at first … but you know what they’re saying. Buy a dip!”

And even without the “pop” and surge on the first day in the US last year, investors could still make money-after all, Facebook (NASDAQ :), Uber (NYSE :), Peloton (NASDAQ). :) was also an IPO. Flop first.

($ 1 = 0.7236 lbs)

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Deliveroo IPO blunder makes small investors a bad taste By Reuters

https://www.investing.com/news/stock-market-news/deliveroo-ipo-debacle-leaves-small-investors-with-bad-taste-2463994 Deliveroo IPO blunder makes small investors a bad taste By Reuters

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