Yahoo Finance Deliveroo stock hits another new low as selling continues
Deliveroo's (ROO.L) share price still hasn't found a floor.
Shares in the takeaway app continue to fall on Monday and hit a new all-time low. Deliveroo's stock price fell as low as 241.70p in afternoon trade, marking the lowest level since the company went public just under two weeks ago.
Shares were still down 2.9% to 247.21p by late afternoon in London.
Monday's drop means Deliveroo has now reached new all-time lows two sessions on the bounce after slumping almost 10% on Friday.
Deliveroo sold shares at 390p-a-piece in its initial public offering. 70,000 individual investors put £50m into the company through the process. Shares in the company promptly fell 30% when they began trading on the London Stock Exchange.
READ MORE: Deliveroo IPO stock flop raises questions for Goldman and JP Morgan
Monday's fall puts Deliveroo's stock 36% below its IPO price. The company is currently valued at £4.2bn by the market, compared to the £7.6bn price tag investment bankers put on it.
Investors have said bankers overvalued the company. Many institutions also expressed concerns about Deliveroo's persistent losses and governance structure, which gave founder Will Shu continued control of the business even after it floated. Aviva (AV.L), L&G (LGEN.L), and M&G (MNG.L) all ruled out investing in the business before it floated.
The timing and structure of the deal hasn't helped Deliveroo's share price either. The stock floated on 31 March, which marked the end of the first quarter. Investors are typically rebalancing portfolios and measuring performance at this time. Most are unwilling to take new positions.
READ MORE: Deliveroo IPO flop deals blow to London's tech ambitions
Shu's continued control of the business through a dual-class share structure also meant Deliveroo was ineligible for inclusion in the London Stock Exchange's premium segment. That meant it couldn't be included in any FTSE indexes. ETFs and other passive investment vehicles therefore did not buy the stock.
Bankers and advisors that worked on the deal blame broader market conditions for the failure. Investors have been rotating away from tech stocks towards companies that are poised to do well as economies begin to reopen. Those close to the float also claim short-sellers targeted the IPO, although public market disclosures have yet to back this up.
There were fears in the City that Deliveroo's disastrous debut could derail plans to attract more tech companies to list in London. Cambridge-based cyber security firm Darktrace on Monday became the first major tech business to announce plans to list in London since Deliveroo's debut.
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"There is a lot riding on Darktrace’s forthcoming IPO after Deliveroo’s stock market flop," said Russ Mould, investment director at stockbroker AJ Bell. "The food delivery company’s IPO disaster has put a cloud over the UK tech sector and whether other tech entrepreneurs would really want to risk floating their company in London.
“If Darktrace manages to float its shares successfully and see them rise in value once trading begins then sentiment may improve towards London as a listing venue."
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