Disaster strikes as Deliveroo becomes ‘worst IPO in London’s history’ | Hacker News Reader

Disaster strikes as Deliveroo becomes ‘worst IPO in London’s history’

ft.com

27 pointsmaxbaines15 comments

It was very successful for Deliveroo as they raised cash at what now seems a very high valuation. Not so successful for the new shareholders though.

They are losing money in a time which by all accounts is the best time they will ever have (because of COVID-related restrictions and consumer pattern shifts) and they blame short sellers for it?

Deliveroo made the mistake of pulling out of a bunch of countries right before the pandemic hit. They left Germany leaving only Lieferando here, which is massively terrible at its job.

Deliveroo was a pleasurable experience to use and their support was quite decent. The app was probably the best I've ever used, and I lived in San Francisco for quite a while using such apps.

This just seems like a bunch of poor business decisions with an otherwise decent group of employees, from my point of view. Quite typical.

What is Lieferando doing wrong?

Their support is non-existent. There's no recourse for restaurants giving you the runaround, which is often the case when you're ordering late at night.

their app sucks so badly. Very tough to find something to eat unless you know exactly what you want. Language translations not fully there-- it's just not an international-worthy offering (even the name tells you that).

But Wolt is also here, and their app and service are great.

Disaster strikes who?

Sure didn't strike Deliveroo as they just raised a ton of money.

Archive link: https://archive.is/vXcwU

Even their logo looks like a highly stylised two fingers.

The FT article is paywalled. There's an equivalent story here at Bloomberg:

https://www.bloomberg.com/news/articles/2021-03-31/deliveroo...

You'll have to skip past the typical anti-UK anti-Brexit sentiment that fills journalism these days. The article tries to make it sound like Deliveroo over-shooting their IPO is an indictment of the entire country where it's based, except:

"Among the five biggest deals in London this year, Deliveroo is the only company that didn’t receive the highest targeted valuation ... Doordash Inc. has slumped 24% this month, and European rivals Just Eat Takeaway.com NV and Delivery Hero SE have also fallen this year ... The company and its banks also sought a premium valuation for the stock. At the offering price, Deliveroo fetched 6.4 times last year’s revenue, versus a multiple of 5.8 for Just Eat ... Deliveroo is the largest IPO in the U.K. since e-commerce operator THG Plc’s 1.88 billion-pound listing in September. Like THG, Deliveroo listed with weighted voting rights on the LSE’s standard segment and therefore can’t be included in indexes such as the FTSE 100, despite its size. While the stock will lose out on fund flows from passive strategies that track these benchmarks, the same situation hasn’t prevented THG’s shares from surging 26%"

So there's not much to this story except an unimpressive startup IPO. But there are lots of those about these days. This one is 8 years without a profit - could be worse given the number of "startups" reaching 15 or 16 years without a profit.

The short-sellers are having a party right now.

Though a delivery company not turning a profit in a time when an unprecedented number of people are having items delivered to their homes must be somewhat exceptional.

Added to that the ongoing campaigns to regularise staff contracts and working conditions means that the cost of labour is likely to rise in the short to medium term.

If Deliveroo can't make hay while the sun shines do they have much of a future?

Wolt seems to become really popular. Which is funny because you really see how much less skilled their drivers are since they are new, with them I had one of the worst deliveries in years. But it's obvious they have a solid business model, subsequent deliveries were better anyway. Also choosing food is actually easier since all their partner restaurants seem rather high quality.

Are you sure they should be aiming to be profitable through the biggest expansion in at-home delivery ever? Or should they not have invested more in growth through this period? Surely it’s only unit economics that matter, not whether they are profitable?

Not really exceptional. Lots of these firms sell a dollar for 80 cents so becoming more popular increases their losses. The real question is whether this sort of delivery service is still popular when priced correctly.

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