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The UK-based online food delivery company Deliveroo could IPO as early as next year.
If you haven't heard of this company yet, that's probably because it only operates overseas.
But Deliveroo is actually the third largest food delivery app in the UK, after Just Eat and Uber Eats.
And you want to pay attention now because it could deliver massive returns to investors who do know about it before it IPOs.
Just Eat held its IPO in April 2014 and was valued at $2.4 billion. Today, it's valued at $17.8 billion.
That's a 642% return in just over six years.
To put that in perspective, the S&P 500 only grew 84% over the same time frame...
With a valuation similar to what Just Eat had in 2014, Deliveroo stock could be an interesting buy if it IPOs next year.
Here's everything you need to know about the company now, including the potential Deliveroo IPO date, the Deliveroo stock ticker, and its $575 million investment from Amazon.com Inc. (NASDAQ: AMZN)...
Deliveroo's Background & Business Model
Deliveroo is a British tech success story.
After the company's founder, William Shu, moved from New York to London, he found it was almost impossible to get food delivered.
So, he started Deliveroo to help people order their favorite meals directly to their homes.
Similar to Uber Eats, users can look up and order from restaurants on Deliveroo based on their location.
The company now operates in over 500 towns and cities across the UK, the Netherlands, France, Belgium, Ireland, Spain, Italy, Australia, New Zealand, Singapore, Hong Kong, the United Arab Emirates, and Kuwait.
Deliveroo is working with more than 80,000 partner restaurants and employs over 60,000 riders who deliver customers' meals on bicycles with oversized light blue backpacks with the company's logo on them.
The company's riders stay within 2.2 kilometers of the restaurants they sign up for in order to deliver in under 30 minutes.
Payment can be made on the platform in an instant. Once the order is placed, the restaurant is notified, and the user can track the progress of their order.
Another thing that sets Deliveroo apart from its competitors is its delivery-kitchen concept - called Deliveroo Editions.
Through comprehensive data gathering, the company has identified gaps in the market and created pop-up restaurants in areas where people are not being serviced.
In my opinion, this is their best way to profitability because the margins on these sales are greater than the margins on sales of food from other restaurants.
Deliveroo is not profitable yet, but it does have an extensive list of investors who must believe it will be in the future...
Deliveroo's Growth & Eye-Popping Investor List
In 2018, Deliveroo was named Europe's fastest-growing company by Financial Times. That accounted for the company's performance from 2013 to 2016.
Over this period, revenue increased by over 100,000%, with a compound growth rate (CAGR) of 923%.
With total revenue growth of 15,749% at CAGR of 441% from 2014-2017, the company earned Europe's second-fastest growing company title in 2019.
That's when Amazon stepped in and invested $575 million into the business for a 16% stake at a little over a $4 billion valuation.
In total, Deliveroo has raised over $1.5 billion in venture capital funding from investors including Amazon, T. Rowe Price, Index Ventures, Colt Ventures, Vis Capital, General Catalyst, GR Capital, DST Global, Greenoaks Capital Partners, Accel, Hummingbird Ventures, and Hoxton Ventures.
How Deliveroo Has Handled COVID-19
Difficulties arising from the coronavirus pandemic initially led Deliveroo to lay off 15% of its staff as restaurants closed around the globe.
But now as most are opened back up, it has proven to be more of a boom for food delivery, and demand has never been higher.
As people are more fearful of eating out, millions are turning to the safety and convenience of food delivery... from restaurants and grocery stores.
That's right. COVID-19 has also provided an opportunity for food delivery companies to branch into other home delivery sectors - like groceries.
Right now, British supermarkets are competing with each other to dominate the e-commerce space.
Instead of building out their own delivery services internally, they have turned to delivery service companies like Deliveroo to quickly expand their home delivery services.
Britain's eighth-largest grocer, Waitrose, recently partnered with Deliveroo to have its groceries delivered by the company's couriers.
With demand higher than it's ever been before, this could very well be why Deliveroo may be looking to go public soon. The company wants to capitalize on this increased demand and record sales numbers.
It's estimated that Deliveroo could go public (stock ticker unknown for now) around a $4 billion valuation - the same deal Amazon got in 2019.
If the company grows to the same valuation of Just Eat ($17.8 billion) over the next couple years, early investors would reap returns of 345%.
Should I Buy Deliveroo Stock After the IPO?
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It's too early to tell whether investors should buy Deliveroo stock at the IPO.
First of all, we don't know what the markets will look like when it goes public.
Since it will be after the 2020 U.S. presidential election, a lot could change.
We need to know how much money the company has actually made during the pandemic.
We need to know the exact valuation of the business, how many shares are being sold, the estimated price per share of the stock, and what Deliveroo plans to do with all the money raised.
All of that will be provided to us in the S-1 - the document every company has to file with the SEC before it goes public.
Once we have that information, we'll be sure to share it with you.
In the meantime, here are three stocks we like that you can buy now...
Three Stocks Even Better Than Deliveroo
Dozens are overpriced and overhyped - you should ditch them ASAP.
But Shah says THESE three stocks are "screaming buys."
All three are trading at a discount... they're under-the-radar companies most people haven't even heard of... and they have massive tailwinds ready to send their share prices into the stratosphere.
To get the company names, tickers, and price targets for Shah's picks, go here now.