Deliveroo shares have slumped as much as 30% as the takeaway delivery company made its highly-anticipated stock market debut.
The flop wiped more than £2bn off the company’s initial £7.6bn valuation – just over a week after it was estimated at up to £8.8bn.
Some of the City’s biggest institutional investors had shunned the initial public offering (IPO) over concerns about its working practices and the dual-class share structure which gives founder Will Shu greater control.
The loss-making company said this week that it had received "significant demand" from investors across the globe – more than enough to cover the offer of shares worth £1.5bn several times over.
However, its price range last week of £3.90 to £4.60p per share – which would have valued it as highly as £8.8bn – has narrowed over recent days, with the business citing "volatile global market conditions".
Wednesday’s float priced Deliveroo at £3.90, the bottom end of that range, and equivalent to £7.6bn.
But that was not enough to prevent a flop when trading began, with shares going as low as £2.73, although they later climbed back to around the £3 mark.
Deliveroo’s float is London’s biggest IPO since commodity giant Glencore went public in 2011 – and the biggest-ever tech float in the city.
Its dismal reception could be seen as blow to Chancellor Rishi Sunak’s ambition to attract more technology companies to list in the UK.
Mr Sunak had hailed the company as a "true British tech success story" when it confirmed earlier this month that it would float in London.
Deliveroo, which has around 45,000 restaurants on its platform in the UK and more than 100,000 worldwide, has benefited over the past year from an increased appetite for takeaways with dining out banned or restricted.
Orders over January and February were 121% higher than the same period a year ago, while for 2020 the total of £4.1bn was 64% higher than a year earlier.
However, it still made an underlying loss for the year of £223.7m.
Russ Mould, investment director at AJ Bell, said "Deliveroo has gone from hero to zero as the much-hyped stock market debut falls flat on its face.
"It had better get used to the nickname ‘Flopperoo’.
"The narrative took a turn for the worst when multiple fund managers came out and said they wouldn’t back the business due to concerns about working practices.
"This is likely to have spooked a lot of people who applied for shares in the IPO offer, meaning they are racing to dump them."