2021 was a roller-coaster ride for shareholders Delivery Holdings (LSE: ROO). Founded in 2013, the online food-delivery company floated in London on Wednesday, March 311. Sadly, this IPO (Initial Public Offering) was a massive flop, as the price of the Deliver share fell on its first day.
Deliver share price flops
The initial Deliveroo share price was set at 390p, valuing the group at 7.6bn. Typically, IPOs are priced to give institutional investors a first-day ‘pop’ (improvement). However, when trading opened on Wednesday morning, the shares became freefall. In London’s largest IPO since 2011, Deliveru shares fell 271p, down 119p (-30.5%) in minutes. A banker called it, “Worst IPO in London History” The rocky journey of the ROO continued, with the stock crashing at a low of 224.44p after the IPO on April 23rd. Since the price of the delivery stock is moving southwards, I am relieved not to invest in this IPO.
ROO roared life again
With ROO trading at 231.12p on April 22, I said that the shares still seem expensive to me. But I was completely wrong. As it happened, the April 21 delivery marked a low point for the share price. However, the stock mostly moved towards the end of June, closing at 251.6p on 23 June. But then it started a terrible two-month geue, rising to new heights. On August 1, it reached an intra-day high of 39..8p, 8.pp (+1. %%) of its IPO price. From lows in April to highs in August, the ROO rose 172.36p. This is a huge gain of more than three-quarters (+ 76.8%). Boy, April 22 How wrong I was, isn’t it?
Should I buy ROO today?
As I write late on Monday, the price of the Deliveru share is close to 298p, about 20p below its price range. This puts the food supplier at মূল্য 4.54bn. I don’t own ROO shares, but will I buy them at current price levels?
As a veteran value investor, it is not easy for me to invest in go-go growth stocks like ROO. First, as a heavy-loss business, Deliver has no fundamentals (profit, earnings per share, or dividends) to guide me on the value of the Deliver share. Second, I consider this group to be a logistics company rather than a technology business. Third, future changes to the employment law could make hiring thousands of ‘gig workers’ (independent contractors) more expensive. Fourth, Deliveru’s dual-share structure concentrates power in the hands of founder Will Shoe. This means that it cannot be included FTSE 100 The index, which keeps me a bit off.
On the other hand, if I look at Delivero as a data-rich, hyper-growth tech stock, its shares could actually be cheaper today. The food-delivery market is up and Deliveru is a big player, with UK arch-rivals Just eat. But who is to say that one of these companies will actually emerge as a profitable market leader? As billionaire investment guru Warren Buffett said on May 1 about rising stocks, “There’s more to stock picking than figuring out what’s going to be a great industry in the future.In short, as an old school price investor, I would not buy ROO stock today. Then again, growth investors can just. And a great set of results could send the delivery share price skyrocketing, putting me with an egg in my mouth for the second time!
Is this little known company the next ‘Monster’ IPO?
At the moment, this ‘Bought by shouting’ The stock is trading at a steep discount from its IPO price, but looks set to skyrocket in the coming years.
Because this North American company is the clear leader in his case which is assumed Valued at 1 261 billion by 2025.
The Motley Flower UK team of analysts has just released a comprehensive report that shows you why we believe it has so much potential.
But I warn you, You need to act fast, Given how fast this ‘Monster IPO’ is going.
Cliffordcy has no position in any of the shares mentioned. Motley Flower UK has no position on any of the shares mentioned. The opinions expressed in the companies mentioned in this article may differ from those of the authors and therefore the official recommendations we make on our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Flower, we believe that considering a variety of insights makes us a better investor.