Deliveroo faces second day of pain

Deliveroo faces second day of pain: Delivery firm’s share price tumbles by another two per cent after £2.3bn was wiped off its value yesterday as customers who invested blast company for promoting IPO on its app

  • At 11am the share price on London’s blue chip index was down 4.55 points  
  • The firm clawed back some value following a 12-point drop when trading opened
  • It followed a disastrous opening day when £2.3billion was wiped off firm’s value

Deliveroo braced for a second day of pain on the FTSE 100 as the stock remained unstable and fluctuated after an early morning plummet.

At 11am the share price on London’s blue chip index was down 4.84 points (1.68 per cent) to 282.61.

The food delivery firm clawed back some value following a steep 12-point drop to 275.65 as reeling investors ebbed away when trading opened.

It followed a disastrous opening day as a publicly listed company, when £2.3billion was wiped off the firm’s worth as the share price plunged 30 per cent.

Richard Hunter, head of markets at Interactive Investor, warned the instability in the share price would continue for the next few days before settling.  

He told MailOnline: ‘The initial price was obviously too high, and what we’re seeing now is it trying to find its level, and it will continue to drift until it does.

‘This usually takes around three to four days from the opening day to flush out the sellers and find some buyers.’

At 11am the share price on London’s blue chip index was down 4.84 points (1.68 per cent) to 282.61

Deliveroo braced for a second day of pain on the FTSE 100 as the stock remained unstable and fluctuated after an early morning plummet

Deliveroo had offered customers the opportunity to buy between £250 and £1,000 of IPO shares – and these were believed to be the majority of the 70,000 investors.

They bought in at £3.90 a share but when the FTSE opened yesterday this sagged to £3.31 before free-falling to £2.73 to end the day at £2.87. 

Many of these dismayed loyal app users were licking their wounds this morning and lashed out at Deliveroo.

One investor tweeted: ‘The main pull was the advert in the app… Why would a new age company directly offer its customers a bad deal through its app in these times?’

Another said: ’30 per cent discount at IPO to loyal retail customers getting ripped off on over-priced share offering.’ One investor said it was ‘such a disappointment’. 

But others were optimistic the share price would bounce back and are sticking with their stocks.

Crystal Carnegie from London told BBC Radio 4’s Today programme: ‘I’ve invested the minimum amount into the Deliveroo IPO of £250 as it was my first time investing in a company. 

‘I believe in Deliveroo for the long-term and think companies like this are worth the investment.

‘Also I think it’s cool to own a share of a company that I use more often than I’d like. It’s interesting to see what’s playing out at the moment but I do still really think it will go up in the future.’

Founder Will Shu, 41, who was the company’s first rider and still does regular delivery shifts on his bike, was expected to make £500million from the biggest float for a decade.

But the final £7.6billion figure, equivalent to 390p per share, was at the bottom end of the food delivery firm’s previous pricing range following an investor backlash over staff working conditions. 

It had been trumpeted as London’s biggest listing for a decade, raising around £1billion to fund the company’s expansion efforts.

Rishi Sunak, the Chancellor, had hailed Deliveroo’s decision to go public in London as a ‘true British tech success story’.

He was asked today by ITV political editor Robert Peston if he now felt embarrassed. He said: ‘Gosh, no… share prices go up, share prices go down. We should celebrate success in this country.’

‘You talk about Deliveroo, I think I remember Facebook when it first IPO’d – I think the share price halved over the next few months, and then obviously we all know what happened after that.’

Strong demand for the float has been overshadowed in recent days by criticism from heavyweight investors over the status of tens of thousands of Deliveroo delivery riders.

The row over Deliveroo’s riders intensified last week following claims that some of them earn as little as £2 per hour.  

Aviva last week said this was the main reason it had decided not to back Deliveroo’s float.

And in practice many riders earn less than the National Living Wage, set at £8.72 per hour, according to a report by the Bureau for Investigative Journalism, based on hundreds of invoices.

Deliveroo rejected the findings and claimed that riders earn an average of £13 per hour during busy periods.

It says its business model gives riders ‘freedom to choose when and where to work and which deliveries to accept and reject’.

A spokesman added: ‘50,000 riders choose to work with Deliveroo, and thousands more people apply to work with us every week. ‘Our way of working is designed around what riders tell us matters to them most – flexibility.

‘These unverifiable, misleading claims should not be taken seriously.’

The shy and single Deliveroo ‘geek’ who’s set to make £500million from its stock market flotation – but STILL delivers meals himself, can only cook an omelette and just eats food from his own app

Deliveroo’s founder may be about to pocket up to £500million from its £7.6billion stock flotation, but shy and single Will Shu is still expected to be out on his bike delivering food for the company today.

Most entrepreneurs about to take home approaching half a billion pounds would have already have put money down on a mansion or a super car.

But the notoriously private entrepreneur, 41, will probably treat today like any other, spending the day at his terraced house in Notting Hill, or at his office in the City, eating breakfast, lunch and dinner all ordered through the Deliveroo app.

Mr Shu, a self-confessed geeky American who moved to the UK to work for JP Morgan, founded the company in 2013 after being forced to eat Tesco sandwiches and salads during late shifts working as a banker in Canary Wharf. 

Today he runs Britain’s third largest takeaway delivery company, behind Uber Eats and Just Eat, having been Deliveroo’s first rider eight years ago. 

The American-born entrepreneur is described by friends as ‘incredibly intense’ and ‘obsessed’ with the business and food.  But despite his wealth and business success, he is believed to have been single for some, if not all, of his time at the helm.

Mr Shu, who says he is a ‘good tipper’ to the riders who bring his three meals a day by bike or car, still works at least once a week on his bike – but despite his frontline experience his business remains dogged by claims it fails to pay and treat its delivery staff properly.

CEO of Deliveroo William Shu still goes out on his bike for the company that is set to make him £500m

Yesterday, just 48 hours before launching on the London Stock Exchange, Deliveroo’s maximum potential market valuation fell from £8.8billion to £7.9bn over the issue. But there is still huge interest in the firm, which has never made a profit despite booming sales in lockdown.

It came after two of Britain’s biggest investors will refuse to buy shares in Deliveroo when it launches on the stock market next month because of concerns about how they treat staff. 

At the centre of the controversy is the company’s classification of its riders as ‘self-employed’, meaning they are not entitled to minimum wage, holiday pay or sick leave.

Investors say they have been spooked by the issue, which could cost the company huge sums after Uber agreed to pay their drivers more and give them the same rights as employees after a series of court cases.

Shu is set to offer the group’s most prolific riders up to £10,000 in cash each following the IPO, and customers are also being offered the chance to buy £50million in shares in multiples of £250.

Such is the entrepreneur’s dedication to the business – and love of restaurant food – he orders breakfast, lunch and dinner through Deliveroo.

Mr Shu’s first office was a ‘death trap’ in Maylebone, shared with a company called ISIS and cable channel Gem TV

Although he loves ordering from KFC and Nando’s, Will does tend to order ‘regimented’ meals. 

These include boiled eggs for breakfast, chicken and broccoli for lunch and a salad for dinner from restaurants around his west London home to help avoid piling on the pounds. 

Mr Shu was born to Taiwanese parents in Connecticut in 1979. After getting a degree from Northwestern University he joined JP Morgan, first working in New York and then moving to their London headquarters.

It was there, while wandering Canary Wharf’s mall at night looking for restaurant quality meals, that he cooked up the idea for Deliveroo, setting up the firm and becoming its first rider.

He founded the business with his childhood friend Greg Orlowski, a software engineer who designed the app. Orlowski quit five years ago to spend more time with his daughter in Chicago, but he and Mr Shu remain friends. 

Shu and Orlowski set up shop in a ‘death trap’ office in Marylebone shared with a company called ISIS and cable channel Gem TV. 

The laid back and shy businessman’s, soon to be worth hundreds of millions of pounds, was known for his scruffy clothes and wearing a T-shirt and shorts all year round.

One colleague said: ‘He may have been the only founder who pitched us wearing shorts.

‘He wore shorts for the first four years I worked with him, regardless of the weather or the occasion.’ 

Another said: ‘I’ve seen him do every job in the company – from being a rider to doing customer service to signing up restaurants.

‘His job is incredibly intense and he obsesses over it, but he’s always down to earth and has a laugh’. 

After leaving their first office, they set up their headquarters on the banks of the Thames.

Staff are encouraged to dress casually, with Shu keeping the T-shirt but swapping the shorts for smarter chinos.

In line with many tech firms, the building has plenty of sofas to flop on during the day and even a leisure area with games and a basketball court.

Jaegermeister is available for the staff if they want it, while office chairs are swapped for casual ‘swinging seats’. 

Source: Read Full Article