What to make of Deliveroo’s rough IPO debut

Deliveroops.

After a lackluster IPO pricing run, shares of Deliveroo are lower today, marking a disappointing debut for the hot delivery company.

A good question to ask at this juncture is why Deliveroo struggled with its IPO during a historically strong moment for tech flotations. The European unicorn listed on the London Stock Exchange, however, possibly placing its public offering in a different climate than recent IPO successes listed in the United States.

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TechCrunch noted on Monday that there were local concerns regarding Deliveroo’s governance and treatment of workers. At the time, however, those worries merely led to a decrease in the company’s IPO valuation.

Why did Deliveroo struggle when it began to trade? Is it suffering from cultural dissonance between its high-growth model and more conservative European investors? Let’s peek at the numbers and find out.

Deliveroo versus DoorDash

To ground us, let’s explore how differently the public markets value Deliveroo and DoorDash. If they are valued somewhat closely, we’ll be able to dismiss the question of whether the British delivery giant is really being treated with more skepticism than its American comp.

Not that we care, really, one way or the other about any single company’s value. But we do care if listing on a European exchange — I refuse to acknowledge Brexit this morning — means that companies valuing growth over profits are going to generate more stick than praise when they list.

So, briefly, here’s the data we need to make our comparison. We’ll start with DoorDash:

• DoorDash 2020 revenue: $2.886 billion
• DoorDash 2020 revenue growth (YoY): 226%
• DoorDash market cap: $41.98 billion
• Implied 2020 revenue multiple: 14.54x

And now, Deliveroo:

• Deliveroo 2020 revenue: £1.191 billion
• Deliveroo 2020 revenue growth (YoY): 54.3%
• Deliveroo market cap: £5.55 billion
• Implied 2020 revenue multiple: 4.66x