Deliveroo valuation seems excessive for a business so far from profit as tech bubble continues to inflate prices, says Warwick Business School

Professor John Colley, Associate Dean of Warwick Business School and an expert on tech firm IPOs, said:

"This valuation of Deliveroo seems excessive for a business which is still many years from profit, especially given that some doubt the home takeaway delivery model can become profitable outside of London.

"The sole basis for this valuation appears to be the immense amounts of cash looking for growth technology stocks.

"Bear in mind the recent Supreme Court finding that Uber drivers are ‘workers’ and have certain rights such as paid holidays and pensions. This finding may well apply to takeaway home delivery too, driving up their costs.

"Ultimately Deliveroo will have to charge customers and restaurants far more to make a profit, but that brings its own difficulties. For restaurants, margins are already narrow. And at what price do customers simply decide to collect their own meals?

"Potential investors should also remember that if this listing is under new stock market rules, it may well be accompanied by founder share rights. That means if the company is badly run there is little shareholders can do to change the board."