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.
Subscribe to 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”.
Sign up for MoneyWeek's newsletters
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
-
Six out of 10 retirees who accessed a pension didn’t use Pension Wise - how does the guidance service work?
Many pension savers don’t bother using the free government-backed service Pension Wise. So, how does it work, and could it be useful for you?
-
UK-EU trade deal: Britain to get a £9bn boost to the economy by 2040
The government’s agreement with the EU follows on from separate deals with India and the United States. Will it breathe life into the UK economy?
-
'Pension funds shouldn't be pushed into private equity sector'
Opinion The private-equity party is over, so don't push pension funds into the sector, says Merryn Somerset Webb.
-
Greg Abel: Warren Buffett’s heir takes the throne
Greg Abel is considered a safe pair of hands as he takes centre stage at Berkshire Hathaway. But he arrives after one of the hardest acts to follow in investment history, Warren Buffett. Can he thrive?
-
Who will be the next Warren Buffett?
Opinion There won’t be another Warren Buffett. Times have changed, and the opportunities are no longer there, says Matthew Lynn.
-
Will Comstock crash – or soar?
Opinion The upside for Comstock, a solar panel-recycling and biomass-refining group, dwarfs the downside, says Dominic Frisby.
-
'As AGMs go digital, firms must offer a new form of scrutiny for shareholders'
Opinion Technology has rendered big AGM meet-ups obsolete, but the board still needs to be held to account, says Matthew Lynn
-
Unilever braces for inflation amid tariff uncertainty – what does it mean for investors?
Consumer-goods giant Unilever has made steady progress simplifying its operations. Will tariffs now cause turbulence?
-
Two ways to tap into monopoly profits from airports
Most investors can’t get their hands on airports. Here are two ways you can
-
Fat profits: should you invest in weight-loss drugs?
The latest weight-loss treatments could transform public health and the world economy. Should you invest?