LONDON—Shares of Deliveroo Holdings PLC dropped 26% on their first day of trading, as investors shunned a landmark offering from the Amazon.com Inc. -backed food-delivery startup amid concerns over whether it can maintain its pandemic momentum.
The downbeat debut casts a shadow over an otherwise buoyant global market for initial public offerings. The total value of IPOs is up more than 500% at $195.5 billion in 2021 versus the comparable period last year, according to data from Dealogic. That gain comes as investors have embraced offerings from companies that have thrived in the pandemic, including Europe’s InPost SA, a parcel-locker provider, and South Korea e-commerce giant Coupang Inc.
However, Wednesday’s selloff in Deliveroo shares shows this appetite could be waning, as the reopening of some economies makes bank, energy and other cyclical stocks that struggled during the spread of Covid-19 appear more attractive.
Deliveroo, the U.K.’s equivalent of DoorDash Inc., closed Wednesday at £2.87 a share on the London Stock Exchange, below its initial public offering price of £3.90, valuing the company at £5.6 billion, equivalent to around $7.7 billion.
A surge in demand for online deliveries fueled by pandemic-induced lockdowns made Deliveroo’s IPO one of the most anticipated in Europe in 2021. However, investors’ interest has cooled in recent days—with large institutions in the U.K. including Aviva Investors and Standard Life Aberdeen PLC, saying they wouldn’t buy shares—amid growing concerns about the company’s profit outlook.