Talabat’s much-hyped debut turned into a dud on Tuesday, marking the second UAE IPO flop in a month.
This comes on the heels of hypermarket giant Lulu’s lukewarm November listing, a one-two punch for a market famous for crazy IPO gains of more than 300% on Day 1.
Talabat’s stock closed at 1.49 dirhams, down 7% from its IPO price of 1.6 dirhams. Parent company Delivery Hero, which owns 80% of the company post-IPO, felt the pain in Frankfurt, with its shares dropping 11%.
At 28x forward earnings, the stock was pricey for the UAE market, Mohammed Ali Yasin, Founder and CEO of The Oracle Financial Consultancy, tells MONIIFY. Institutional investors, not retail traders, dumped shares early, he notes.
IPO blues
The bad vibes aren’t new. Lulu’s IPO was oversubscribed 25 times but failed to rise on debut and has since sunk 8%.
There are exceptions. Abu Dhabi’s ADNOC Gas climbed 24% since its debut, though lagging a 45% jump in global stocks. Dubai’s parking operator Parkin saw gains thanks to a new and helpful tariff policy.
But six of the eight major IPOs since 2023 have failed to rise after a first-day pop. What gives?
Limited floats, particularly from state-owned companies, leave little room for major players to move without triggering volatility. Foreign and institutional players shy away from such swings, leaving IPOs vulnerable.
Liquidity has also dried up in 2024, Yasin says, with most IPOs trading below or at par with their listing prices. That doesn’t exactly scream confidence for future listings.
Read more: Can Talabat beat Gulf’s sizzle-fizzle IPO cycle?
What’s the order?
Having no Day 1 pop, Talabat now faces a steeper uphill battle. Can it defy the trend, or will it go the way of Alef Education and Spinneys, whose post-IPO performances fizzled?
Analysts still see some potential in Talabat.
If the company hits its profit targets over the next two years, its valuation could make sense, Yasin says. Until then, the dividend may be “the only positive return those investors will get.”
Investors will be watching closely to see if Talabat can claw its way back — or if it’s yet another sign that the UAE’s IPO glory days are done.
