April 01, 2021:-The Amazon-backed company failed to deliver on its first day of trading on Wednesday. Shares plunged as markets opened, with investors questioning Deliveroo ability to generate profits and an eye-watering £7.6 billion ($10.5 billion) valuation.

The food delivery app has become one of the famous start-ups in the U.K. It employs more than 2,000 people from 12 markets and uses a network of more than 100,000 riders in delivering food from 115,000 restaurants and grocers.

By market value, its IPO is the largest to take place in London since Glencore went public around a decade ago.

But the stock got a frosty reception from investors. Deliveroo has been plagued by worries over its business model risks if regulators crackdown on the gig economy. Uber reclassified 70,000 of its U.K. drivers as workers entitled to the lowest wage and other benefits this month after the country’s Supreme Court ruled a group of the drivers that they should be treated as workers.

Deliveroo issued its shares at £3.90, right at the bottom of its starting range. However, shortly after trading commenced on the London Stock Exchange on Wednesday, the firm’s share price had gone down 30% to around £2.73, and questions are now being asked about its fallings. Theoretically, Deliveroo can cancel the IPO up until April 7 as it has opted for a “conditional offer.”

If compared, U.S. rival DoorDash saw its shares surge over 85% on the first day of trading in December, giving it a market cap of above $60 billion at the time.

 Closer to home, Deliveroo faces fierce competition from the likes of Uber and Just Eat Takeaway.

The Deliveroo listing was led by JPMorgan and Goldman Sachs, while Bank of America Merrill Lynch, Citi, Jefferies, and Numis were also part of the syndicate. The stock was overallocated, but that didn’t stop it tanking as it floated, leaving some early investors frustrated with how the investment banks priced the company’s shares.