Shares in Deliveroo plunged by as much as 30% in their trading debut today, slicing more than £2 billion off the company's valuation in a blow to the food delivery group and the London market for initial public offerings (IPO).
The highly-anticipated listing marked the biggest in the London market in a decade.
It had been hailed by British finance minister Rishi Sunak as a "true British tech success story" that could clear the way for more IPOs by fast-growing technology companies.
But the debut had already been overshadowed as some of Britain's biggest investment companies shunned the listing, citing concerns about gig-economy working conditions and the share structure.
The 390 pence price tag gave an overall valuation of £7.6 billion and was already set at the bottom of an initial range.
Within minutes of the market opening this morning, Deliveroo lost £2.28 billion of its value, which one senior equity capital markets banker said would hurt the market for initial public offerings in Britain and Europe.
"It's an extremely painful move on one of the most anticipated IPOs of the year," he said, asking to remain anonymous.
We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences
Deliveroo's self-employed drivers have seen a boom in demand during the Covid-19 pandemic, bringing food from otherwise-shuttered restaurants to housebound customers.
But the Amazon-backed company has been running at a hefty loss - it said it narrowed an underlying loss to £223.7m from £317.3m in 2019.
Irrespective of profitability, there has been a clamour for growth companies over the last year as the Covid-19 crisis has sunk rates and government bond yields to all-time lows.
But with US Treasury yields rising, this trade has lost allure and many tech stocks on both sides of the Atlantic have fallen in recent weeks, leading to questions over inflated valuations.
The listing of the London-based company, founded by boss William Shu in 2013, is London's biggest IPO since Glencore's in May 2011 and also the biggest tech float ever on the London Stock Exchange.
The heavyweight investors who stayed away included Aberdeen Standard Life, Aviva, Legal & General Investment Management and M&G.
"The number of institutions lining up to say no on ESG (environmental, social and corporate governance) grounds always looked like it was going to make it a tricky debut," said James Athey, investment director at Aberdeen Standard Investments.