Elliott Wave Perspective: Why Investors Lost “Appetite” for Deliveroo
“In one month, sellers nearly cut the stock’s price in half”
by Bob Stokes
Updated: June 02, 2021
In Q1 of this year, the London Stock Exchange was "raking it in" from IPO proceeds.
As recently as March, those proceeds reached £5.2 billion, which was a new post-financial crisis high.
Yet, things have changed rather quickly -- like a light switch going from on to off.
As our May Global Market Perspective says:
Today, in contrast, stock offerings at already-traded companies are outstripping returns from new offerings, a "turnaround from two months ago, when initial public offerings were racking up unusually strong gains in their debuts." (Bloomberg, 4/6/21) ... According to one Paris-based equity manager, IPOs are no longer "attractively priced from a long-term investment point of view."
A glaring example of the IPO market's current weakness is Deliveroo Holdings, a London-based online food delivery company which started publicly trading several weeks ago.
Let's return to the May Global Market Perspective, which went into the details of the company's stock performance through the end of April:
Deliveroo closed the day down 26%, the worst opening day performance for a London IPO in at least two decades. One banker told the Financial Times that Deliveroo might have been the worst IPO in London history. Either way, the stock fared little better in its subsequent days as a public company. In one month, sellers nearly cut the stock's price in half, wiping away almost £2 billion from the company's initial market capitalization.
Indeed, Deliveroo's stock price continued to trend lower throughout the first three weeks of May.
The exceptionally poor performance of Deliveroo and the frailty of Britain's IPO market are signs of a "fading investor enthusiasm."
This likely has implications for the market as a whole.
Indeed, the May Global Market Perspective shows a chart which depicts Elliott wave analysis of the FTSE 100 and the message is as clear as a bell.
Review this chart, along with other global equity market charts, so you can position your portfolio for what may be just ahead.
Plus, get access to the just-published June Global Market Perspective, as you follow the link below.
Want to Know a Sign of a “Maturing Stock-Market Rally”?
Well, as our May Global Market Perspective says:
Maturing stock-market rallies almost always involve a migration toward smaller companies, as investors get accustomed to (and bored with) the comparatively smaller returns available at larger conglomerates.
From there it describes the consequences:
Smaller, less-liquid shares almost always suffer disproportionately during market drawdowns. [emphasis added]
Learn why this topic is relevant now to a major global financial market as you read our May Global Market Perspective (the new June Global Market Perspective is also now online).
Plus, get insights into cryptocurrencies, forex, rates, metals, energy -- as well as equity markets.
Follow the link below so you can prepare for the start of a huge global financial shift.
Commodity prices have taken a tumble during the past several days. A financial website says the decline is due to the "China crackdown" and "rising dollar." Yet, Elliott wave analysis foretold of the price drop when commodities were still rallying. Take a look at this chart.
See the Trader’s Classroom forecast and Elliott wave pattern that anticipated a rally which saw US Steel nearly double in price.
Ever heard of the acronym FOBI? It was coined here at Elliott Wave International and stands for the "fear of being in." Yes, just the opposite of the better-known acronym FOMO (fear of missing out). Here's an explanation.