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Deliveroo's IPO valuation is too high

Deliveroo's IPO valuation takes it for granted that it will make big profits. Reality suggests this may be hard to do
Deliveroo's IPO valuation is too high

Deliveroo’s flotation on the London market has come with a mix of excitement and controversy. Despite cutting its IPO price range, the shares still look very expensive given that the business faces many risks and challenges in the years ahead and has a lot to prove.

The arrival of Deliveroo on the London Stock Exchange is seen as a boost for a market that is lacking in big tech stocks. Last year, the mere labelling of something as a 'tech stock' with a positive growth story attached to it had been more than enough to see its share price go through the roof.

In more recent times, there has been some sobering up in this mindset as the prospect of rising interest rates and a return to focusing on business fundamentals has seen some of the froth come off share prices. 

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