Deliveroo shares hop to two-year high as it aims for upmarket move
Deliveroo shares bounded to a two-year high on Wednesday after the food delivery company announced plans to switch the category of its stock listing, in a move that could attract a wave of new investors.
The company is proposing to move its shares from the Equity Shares (Transition) category to the Equity Shares (Commercial Companies) category on 10 October, 2024.
This change, which only requires approval from the Financial Conduct Authority (FCA), will place Deliveroo under stricter regulatory standards and could increase the stock’s visibility.
It also sets the company up for possible inclusion in the prestigious FTSE UK Index, which might drive investment from funds that track the FTSE benchmarks.
Panmure Liberum analyst Sean Kealy said the move would likely see Deliveroo enter the FTSE 250 following the next rebalance in December, and “should be incrementally positive for liquidity”.
The brokerage has maintained a ‘buy’ rating on Deliveroo, citing the potential for profitable growth, the prospect of capital returns if it wins in ongoing legal challenges, and its attractiveness as a potential merger and acquisition target.
Deliveroo shares spiked more than 5.5 per cent on Wednesday morning, hitting a high of 165.6p. The stock has climbed 38 per cent in the past year, with 27 per cent of that gain coming since January.
In August 2021, however, the pandemic darling hit highs of over 386p as Covid-19 lockdowns enticed more people to order food to their doorsteps.
Deliveroo’s financial turnaround has caught the market’s attention. Last month, Deliveroo reported a profit of £1m for the first half of 2024, rebounding from a loss of £83m in the same period last year.
However, some analysts are concerned that Deliveroo’s monthly active customers and average orders have stayed relatively flat for a long time.