Deliveroo Rebounds to IPO Price for First Time Since Listing in March

(Bloomberg) -- Deliveroo Plc shares matched their initial public offering price for the first time since listing in March, helping the food-delivery company move past the disastrous plunge at the start of trading.

The stock has soared 71% since touching a bottom in April, bolstered by a favorable court ruling over the employment status of its drivers, a surge in sales and a big investment by peer Delivery Hero SE.

The recovery may ease the sting from Deliveroo’s epic flop at its debut. The shares slumped 26% from their 390 pence IPO price on the first day March 31, plagued by a high valuation, a selloff in global tech stocks and an investor snub over the treatment of its riders.

The plunge was the worst performance in decades for a big U.K. listing and raised concern, so far unfounded, that London’s standing as a hub for technology companies could be damaged.

“Our lockdown love affair with takeaways shows little sign of cooling just yet, with Deliveroo bringing home resilient sales even when restaurants have opened back up,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said following the company’s first-half results. However, Streeter warned that the longer-term outlook for Deliveroo will depend on how demand holds up in a post-pandemic world.

The stock briefly touched an intraday high of 390p on Monday afternoon, and was up 0.9% to 389.4 pence as of 4:20 p.m. in London.

Among the news that’s lifted the stock, a U.K. court ruled in June that Deliveroo’s riders are self-employed. In July, the company raised its guidance for transaction growth this year, and on Aug. 11 it reported a surge in revenue and orders in the first half of the year, evidence that demand for food delivery is holding up even as economies reopen.

Also in August, Delivery Hero unveiled its 5.1% stake in Deliveroo and the company hired the supply-chain boss of Amazon.com Inc., its biggest shareholder, to become chief product and technology officer.

“We’re focused on building a great company internally and externally and hopefully the share price follows that, but it’s just not something that I obsess about if I’m honest,” Chief Executive Officer Will Shu said in an interview on Aug. 11 when asked about the prospect of the stock rebounding above the IPO level.

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