Shares in the takeaway food firm Deliveroo slumped by more than a quarter on its stock market debut, as the eagerly anticipated float turned sour for an army of small investors. The float was viewed as a big moment for the London Stock Exchange, which has struggled to attract listings from fast-growing tech companies that have preferred to join US markets. The chancellor, Rishi Sunak, had previously described Deliveroo as a “true British tech success story” and the company has been urging customers to buy shares via its app in a campaign that helped coax an estimated 70,000 people to spend £50m on stock to accompany their meals. But after the share listing was unveiled, it was beset by bad publicity, as City investors and campaign groups alike expressed concerns about the pay and conditions faced by Deliveroo’s self-employed riders, some of whom said in a survey that they in effect earn less than the minimum wage. There have also been question marks about the Deliveroo founder Will Shu’s plan to retain control of the firm after the float, the company’s prospects as the pandemic abates, and how it might reverse losses that have piled up to reach £875m in the past four years. Amid growing uncertainty, the company had already priced its float at the lowest end of a range initially set between 390p and 460p. That meant it was seeking a valuation of £7.6bn. At 460p, it would have been worth £8.8bn. Deliveroo blamed “volatile” market conditions for curtailing its ambitions. But as its shares began trading, the price slumped well below even the revised price. Shares initially fell by as much as 30% before recovering slightly to register a 26% deficit by the end of the day, at 287p. That decline wiped nearly £2bn off the value of the business. It was the worst ever first-day performance for a London IPO worth more than £1bn, the markets platform Dealogic said. The disappointing start to life on the stock market means retail investors have already lost a quarter of their investment, on paper at least. Deliveroo customers could apply for a maximum of £1,000 worth of shares, which are now worth £260 less. “Deliveroo has gone from hero to zero as the much hyped stock market debut falls flat on its face. It had better get used to the nickname ‘Flopperoo’,” said Russ Mould at the investment platform AJ Bell. He said large City institutions were sceptical about the company’s target valuation from the off, with investors also alarmed by ethical concerns. “Initially, there was a lot of fanfare about the Amazon-backed company making its shares available to the public, including the ability for customers to buy stock,” he said. “Sadly, the narrative took a turn for the worse when multiple fund managers came out and said they wouldn’t back the business due to concerns about working practices.” The first big City firm to say it would not buy Deliveroo shares because of its riders’ lack of employment rights was Aviva Investors, which has £365bn of assets under management. Its chief investment officer, David Cumming, said: “A lot of employers could make a massive difference to workers’ lives if they guaranteed working hours or a living wage, and how companies behave is becoming more important.” Deliveroo has said that pay should be calculated based on the time that couriers are actually collecting and delivering food but not the periods in between, when it says they could be working for other companies. The company sought to fend off criticism ahead of the float with a charm offensive, offering to set up a £50m pandemic recovery fund to help struggling restaurants and ferry food to the vulnerable. Sunak’s support included backing for a change in City listing rules in the budget, allowing Shu to retain control via a share structure that was not previously allowed for premium listings. Speaking on Wednesday, Sunak insisted he wasn’t embarrassed by the price drop. He said: “Share prices go up, share prices go down. We should celebrate success in this country.” He pointed to the example of Facebook, whose shares fell sharply after it floated but have since soared. Deliveroo has raised about £1.5bn with its offering, £1bn going to the company and £500m to existing investors. Trading in Deliveroo shares is conditional at the moment, meaning trades taking place can still be unwound, or the company could even cancel the float altogether. The float will be unconditional from Wednesday 7 April.