Deliveroo IPO could cause indigestion for investors
Is a firm that has failed to turn a profit – even during the lockdown takeaway boom – worth investing in?


Takeaway-delivery platform Deliveroo is set to be “the biggest London stockmarket debut since Glencore almost a decade ago”, say Mark Sweney and Sarah Butler in The Guardian. It has priced its initial public offering (IPO) “at between £3.90 and £4.60 a share”. This would value the company at up to £8.8bn, about £1bn more than initially expected. At the top end of the proposed price range, Deliveroo would be worth more than Premier Inn and Beefeater owner Whitbread (£6.6bn) and luxury goods group Burberry (£8.2bn).
Deliveroo’s “lofty target” isn’t bad for a company valued at only £5bn as recently as January, says Ben Marlow in The Daily Telegraph. But is a firm that has “wolfed down £1.3bn of private capital since 2013” without any sign of turning a profit – not even during the lockdown takeaway boom – worth investing in? In a few weeks’ time when pubs and restaurants are full and takeaway orders are falling, the shares “might not seem so appetising”.
Still, while prospective investors may get indigestion, those who previously invested in the company will do well, says Alistair Osborne in The Times. Of the £1.6bn the company will raise from the flotation, only £1bn will go to the firm itself.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Founder Will Shu will keep most of his shares, but is planning to “wolf down £28m straight away” with a sale, while hanging on to his class-B shares will give him 58% of the voting rights, thus “bullet-proofing Deliveroo from takeover and [himself] from the sack”.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
-
What is the 25x retirement rule and does it work?
The 25x retirement rule has been around for decades but many experts question if it is a suitable strategy
-
When is the self-assessment tax return deadline?
If you are self-employed, rent out a property or earn income from savings or investments, you may need to complete a self-assessment tax return. We run through the deadlines you need to know about
-
Are wealthy whisky enthusiasts leaving Britain?
Collectables Wealthy whisky enthusiasts are heading to tax-friendly countries such as Dubai, where there is more disposable income to spend on collectable luxuries like rare whisky.
-
'The rise and fall of Kodak is a lesson for the tech giants'
Opinion The long decline of Kodak – a once-dominant company – shows why no business is safe from disruption, says Matthew Lynn
-
8 of the best properties for sale with kitchen gardens
The best properties for sale with kitchen gardens – from a 17th-century timber-framed hall house in Norfolk, to an Arts & Crafts house in West Sussex designed by Charles Voysey with a garden by Gertrude Jekyll
-
Why investors can no longer trust traditional statistical indicators
Opinion The statistical indicators and data investors have relied on for decades are no longer fit for purpose. It's time to move on, says Helen Thomas
-
Investors rediscover the virtue of value investing over growth
Growth investing, betting on rapidly expanding companies, has proved successful since 2008. But now the other main investment style seems to be coming back into fashion.
-
8 of the best properties for sale with shooting estates
The best properties for sale with shooting estates – from an estate in a designated Dark Sky area in Ayrshire, Scotland, to a hunting estate in Tuscany with a wild boar, mouflon, deer and hare shoot
-
The most likely outcome of the AI boom is a big fall
Opinion Like the dotcom boom of the late 1990s, AI is not paying off – despite huge investments being made in the hope of creating AI-based wealth
-
What we can learn from Britain’s "Dashing Dozen" stocks
Stocks that consistently outperform the market are clearly doing something right. What can we learn from the UK's top performers and which ones are still buys?