Deliveroo Share Price Pre-IPO Analysis – Buy, Sell, Wait?

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Deliveroo share price will be in the spotlight tomorrow when the technology company delivers its Initial Public Offer (IPO) in London. So, is Deliveroo a buy? 

The background: Deliveroo is a British food delivery company that delivers thousands of orders every day. The firm has raised more than $1.7 billion from venture capitalists and is now valued at more than $7 billion. Some of its backers are Amazon, Fidelity, and Durable Capital Partners. 

Deliveroo IPO

After months of preparation, Deliveroo will become a public company tomorrow in London. It will be the biggest tech firm to become public in London this year. Also, it is one of the few firns that have opted for the traditional IPO route instead of merging with a Special Purpose Acquisition Company (SPAC). 

Deliveroo’s IPO process has not been smooth. For one, many of the biggest London institutional investors like Aberdeen Standard, Aviva, and Legal & General have shunned the firm because of concerns of the gig economy and how it is structured. For example, the CEO will have 50% of total voting rights. 

Before the IPO, the firm said that it would price it at £3.90 and £4.10, valuing the form at between 7.6 billion and 7.8 billion pounds.

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Is Deliveroo a good investment? 

The question among many investors is on whether Deliveroo is a good company to invest in. In general, the firm has been doing well considering that demand for its services has risen considerably recently. However, as the UK economy reopens, there are concerns about whether this demand will last. Indeed, lockdown-sensitive stocks like Ocado and Tesco  have struggled recently. 

Another concern is that Deliveroo is coming to the market at a time when investors are afraid of highly-valued tech companies. In the United States, stocks of companies like Uber and Lyft have struggled. Just Eat Takeway shares have also dropped by 26% from January. 

There are also concerns about the gig economy and potential laws to make the workers employees.  It is also facing substantial competition from the likes of Uber Eats. So, I recommend waiting the IPO

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