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What PrimaryBid retail investors plan to do next

Will Shu, CEO of Deliveroo.

Aurelien Morissard | IP3 | Getty Images

LONDON – Thousands of amateur investors don’t know if they should snap up shares in food delivery app Deliveroo.

On the first day of listing on the London Stock Exchange, the share price of British startup Deliveroo fell by more than a quarter.

Deliveroo tried to attract UK customers to buy shares of its IPO by showing them ads within the main app and sending emails before going public.

Approximately 70,000 Deliveroo customers agreed to purchase shares worth 50 million pounds ($68.9 million) through a platform called PrimaryBid at an issue price of 3.90 pounds. Each customer can spend 250 to 1

,000 pounds on stocks.

On Thursday, Deliveroo’s stock price was as low as £2.75, which means that many investments are now worth hundreds of pounds less than the price paid for them. Until full trading begins on April 7, retail investors cannot sell their shares.

Impulse buying

An amateur investor told CNBC, “I feel like I’m on a high wall”, describing their investment in hundreds of dollars as “impulsive buying.”

They said: “It seems very interesting to establish a connection with the services I actually use. I like to open up the democratization aspect of these things, but I don’t believe I will return my money.” “I’m very lucky, it’s for me It’s okay, but I know that other customers may not be on the same boat.”

Another amateur investor who works as an analysis manager in London said that they felt very sorry after investing up to £1,000.

“This is a lot of money I saved, but I think it will be a good way to invest in a large British company, which is similar to how my parents’ generation subscribed for stocks in the 1980s. Companies such as British Gas are being privatized.”

This analysis manager who has been a Deliveroo customer for several years said that “Community Share Offer” is a “mass marketing” carried out by Deliveroo. They said: “I received a few emails a month ago and it was on the homepage of the app. I think Deliveroo can really cultivate FOMO awareness among their customers.”

“At the time, Deliveroo was a promising company. No one knew that this company used to be The intention to use dual equity means that Will Shu will still retain majority control. Those who sign via the community sharing offer do not have any visibility or communication at the time of registration, or this will cause a backlash among fund managers. “

To reassure investors, Deliveroo pointed out that the company is still in its infancy in the stock market.

A Deliveroo spokesperson told CNBC: “Although the beginning of the transaction was lower than we expected, we have only begun to become a public company. We believe that our winning proposition will bring long-term value to all shareholders.”

They added: “We thank every customer who participated in our customer quotation event and will work tirelessly for them every day.”

Retail investor Jordan Mary.

Jordan Marie

Jordan Mary, a 31-year-old photographer, told CNBC that he has invested 500 pounds in Deliveroo after some success in his early investment in the fintech company Revolut through the crowdfunding platform Seedrs.

He admitted that he was disappointed with how Deliveroo’s IPO proceeded. Mary said: “This is a huge world of speculation.”

Another investor told CNBC that she “didn’t feel too positive” about her investment. The doctor who invested in Deliveroo to learn about being part of a crowd-based IPO said she thinks her £1,000 investment is now worth £667. She said: “It is fair to say that £1,000 is not a huge loss for me.” “However, it will be for many customers. I am not sure if PrimaryBid is suitable for customers in large schemes.”

A PrimaryBid spokesperson said that the company is “fully aware of the importance of signing the risks associated with IPO investments.”

The spokesperson added: “The one thing we can’t do is tell customers how the stock is issued.” “In the past twelve months, we have completed more than 100 transactions: sometimes they rise, sometimes they don’t.”

They added that given Deliveroo’s customer base and the applicant’s profile, they did their best to reiterate the risks.

Angela Jameson, a communications professional in London, said she spent £500 on the PrimaryBid app to buy Deliveroo stock. She said: “Now the price has dropped by nearly 28%, so 500 pounds is worth 360 pounds in nominal terms.” “I will hold these stocks until I at least break even, and I don’t mind how long it takes because I am not a trader-I always buy and hold.”

Jameson said she was surprised by the market reaction because she believes that retail investors have a lot of pent-up demand and hope to invest in innovative technology stocks as soon as possible.

She said: “I hope to invest in more companies in the early stages.” “The area that really attracts me is the area where the company has unique advantages in technology or science. Fundamentally speaking, this is why I don’t invest more in Deliveroo. The reason for the large amount of funds. This will not make me give up buying technology shares. Depositors are not doing well if they only invest in FTSE or trackers.”

Information asymmetry

Manchester financial adviser, OpenMoney founder Anthony Morrow (Anthony Morrow) told CNBC that he bought £300 worth of Deliveroo shares for his teenage children as a way to introduce them to investment.

He said the IPO was “advertised in the app next to my local pizzeria and rotisserie,” he added, adding that his family often uses Deliveroo.

“I was in that game, so I knew there would be risks,” Moreau said. However, his eldest son was very disappointed and suggested that they should start using JustEat instead of Deliveroo.

Moreau said he thinks many of the 70,000 customers who support Deliveroo’s IPO may be disappointed.

He said: “That is the danger of adopting the PrimaryBid protocol.” “If you don’t proceed as planned, you may alienate many people who are good customers in a highly competitive market.”

The Deliveroo application displayed on the smartphone screen.

Thiago Prudencio | SOPA Images | LightRocket via Getty Images

Morrow believes that regulators should investigate how Deliveroo promotes IPOs to its clients, adding that the preparation of the prospectus is like a real estate agent promoting housing. He said: “There are almost no shortcomings there, and if there are, it is hidden.” “Of course, this is not the way you are talking about balancing all the upside.”

Moreau said retail investors often choose to support companies because they like brands or services.

“Unless you are an institutional professional investor, you will not delve into the prospectus to understand and understand the meaning of the Uber ruling and the Employment Act ruling. You will not know or hear some facts. Large fund managers are working Avoid stocks. This is unfair.”

Software developer and amateur investor Oliviu Gavrilescu told CNBC: “My idea is that it is asymmetric information to publicly issue IPOs to level the playing field with institutions. Stocks before IPOs are not in the retail industry.”

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