Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Retail Investors Show More Appetite For Deliveroo

By Jacob Wolinsky. Originally published at ValueWalk.

financial fast food Deliveroo LON:ROO

Retail investors show more appetite for Deliveroo PLC (LON:ROO) as they get a first bite of trading action


Q1 2021 hedge fund letters, conferences and more

Deliveroo Shares Gained 4% Before Falling Back

Retail investors don’t appear to have lost their appetite for Deliveroo despite the severe bout of indigestion suffered by the company when institutional investors began trading last week.

And by the end of the day yesterday, shares were down by 28% from the IPO price, but this morning a surge of interest from retail investors, who could buy in for the first time saw the company gain 4% before falling back slightly.

This will be some comfort for Deliveroo customers who were encouraged to buy a slice of the company but appeared to have thrown the dice on a disastrous debut. Like a fateful round of Monopoly they were locked out of selling their shares for a week, while the company’s initial valuation fell sharply. Now they finally have a ‘get out of jail’ card, but it seems for now that many have kept it in their back pocket, waiting it out for prices to stabilise. Total market trading volumes are pretty much unchanged from yesterday.

A volatile trading period following an IPO isn’t unusual and we would always encourage investors to have a long term strategy, and not invest in shares for speculative short term gain. However, it is clear that IPOs should offer a much more level playing field from day one for all classes of investors.

The Benefits Of A Regular Retail Offering

Although opening up IPOs to more than institutional investors is welcome, a regular retail offering usually offers a better solution, allowing retail investors to begin trading from day one, via their stocks and shares accounts.

More accurate pricing is also crucial to maintain retail investors enthusiasm for IPOs going forward.  The offering, at £3.90 a share, gave Deliveroo a valuation of around £7.6 billion, sharply above its valuation of around £5 billion in January following an investment round, yet there had been no fundamental improvements to its prospects. Instead the floatation came at a time of increasing concerns surrounding its gig economy model and the expectation that the easing of Covid restrictions could lead to an initial downturn in business.

However, the shift to online ordering is unlikely to fully unravel and Deliveroo’s positioning as a service for premium restaurant brands could still give it the edge over some of its bitter rivals. Its foray into the grocery business could also help it prove more resilient, but questions remain about whether the company will be forced to make changes to its contractor model in the future and the extent to which that would affect its profitability prospects.

Article by Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown


About Hargreaves Lansdown

1.5 million investors trust us with £120.6 billion (as at 31 December 2020), making us the UK’s largest direct-to-investor service.

Our purpose is to empower people to save and invest with confidence. We want to provide a lifelong, secure home for people’s savings and investments that offers great value and an incredible service, and makes their financial life easy.

Clients rate our service highly, 90% say we are good, very good or excellent.

Our expert research has been helping investors for almost 40 years through thick and thin – we’ve seen many market downturns.

We make things easy – it takes just five minutes to open or top up an ISA. More clients log into their accounts via our mobile app than through a desktop PC.

In 2018 we also launched Active Savings, an online savings marketplace that lets savers move money easily between banks, to help their money work harder without the hassle.

Our helpdesk is based in our HQ in Bristol. We have a tech hub in Warsaw Poland and around 100 financial advisers based across the UK. We are a financially secure, FTSE 100 company.

For more information: www.hl.co.uk/about-us

Press centre: https://www.hl.co.uk/about-us/press

Investor relations: www.hl.co.uk/investor-relations

The post Retail Investors Show More Appetite For Deliveroo appeared first on ValueWalk.

Sign up for ValueWalk’s free newsletter here.


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a FREE Daily News membership or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!