Deliveroo IPO debacle leaves bad investors with small taste FILE PHOTO: A delivery driver cycles through Manchester Centre.
LONDON- London-based amateur trader Amy Lee was not sure whether to buy Shares in Deliveroo's stock market debut but decided eventually to take the leap, swayed by ad campaigns on the food delivery company's app.
I had a bad experience, she said; It was my own fault, but I think I was swayed by the thought'surely Deliveroo would n't advertise a bad product to their customers through their app. Would n't this be stupid right now? Lee and others like her, who were given shares worth a total of 50 million pounds are nursing paper losses after Deliveroo shares plunged as much as 30% on their London Stock Exchange debut on Wednesday.
The drop, slicing 2 billion pounds off initial valuations, is a blow to London's ambitions of attracting fast-growing tech companies to Britain.
It may also raise questions about retail traders'appetite for the future investments, particularly in first public offerings- this was the first time individuals in Britain were given a chance to participate in the initial action.
Deliveroo had dubbed its campaign: Great food with a side of shares.
But things went wrong even before the IPO; several asset managers shunned it, citing concerns about gig economy working conditions and Deliveroo's corporate governance.
Many amateurs who discussed the matter on Reddit forums cited similar reasons for steering clear. Since purchasing 250 pounds worth of stock, Lee has done more research and now says she is gutted to have given her money to what appears to be another greedy tech company lacking social value or drive to things differently.
She ca n't sell until April 7 because of rules around conditional trading- a practice customary in London IPOs until shares settle, usually lasting a week.
A spokesperson for PrimaryBid, a platform that allows major investors to participate in retailer share sales, said this had been made clear at every stage to customers.
One Londoner who bought 295 pounds of Deliveroo stock said the company's sales team seemed to have bent over backwards to turn diners into investors.
Each time you placed a Deliveroo order they flashed a sign.
They let me invest even without a brokerage account, and they said that we will open a Lloyds account for you and do it for you, a one-off fee of 5 pounds.
He made it super helpful, requesting anonymity; Asked for comment, a Deliveroo spokesperson said: Although trading started lower than we would have liked, we are just starting our public life as a long-term company and we are confident that our winning proposition will deliver long term value to all shareholders. We thank each and every day our customers who have took part in our customer offer and will work tirelessly for them. The shares of Dealogic have recovered slightly from the London markets low on Wednesday, but their first day performance was the worst on record for an IPO worth more than 1 billion pounds, Dealogic said. Retail investors will likely be wooed by other market debutants as many trading companies, including the Robinhood app, say they want to democratize IPOs by restricting allocations only to institutional investors.
PrimaryBid is in talks with other candidates for posting on the list, a source familiar with those discussions has told Reuters.
The company takes orders from individuals and then makes a collective bid on deals.
Bankers say it has become an influential participant by obtaining funding from tech firm Ocado and caterer Compass Group.
PrimaryBid estimates that retail ownership is about 15% of the UK stock market as many people who have spent the pandemic with spare cash have taken to dabbling in equity on trading apps.
Although the U.S. amateur participation in 2009 lags over UK levels of 10% -- 30%.
Still, some- such as Sam Elliot, a London-based Primatologist- confess to have become obsessed with stock markets following the January frenzy around the U.S. video game retailer GameStop. He invested 250 pounds in Deliveroo and intends to hold them for the long term, while also gutted by the share decline.
Another investor and former Deliveroo courier Rui Lopes also committed 250 pounds, a sum he said he could afford to lose.
The price drop did make me somewhat apprehensive at first but you know what they say.
And even without the IPO pop or surge of the last year's US deals, investors could end up in the money- Facebook, Uber and Peloton were first also IPO flops.