Deliveroo's IPO flopped this week. The UK startup may have waited too long to cash in on the IPO frenzy for COVID-19 'winners.'

• The timing of Deliveroo's IPO may be one key reason why investors shunned its landmark offering.
• Appetite for food-delivery companies is fizzling out now that vaccination drives are going strong.
• Deliveroo doesn't have the scalability of a bigger US tech company like Uber, one market analyst said.

Shares in British food-delivery startup Deliveroo tumbled as much as 30% on its first day of trading this week, even after the company priced its shares at the lower end of its IPO range.

This marked an unfavorable start for one of Europe's biggest IPOs in a decade.

It seems like Deliveroo may have waited too long to cash in on the IPO frenzy for firms that managed to make the most of the "COVID-19 economy," such as US peer DoorDash. The drop is linked in part to bad timing.

"Timing is everything in the IPO market," Robert Johnson, finance professor at Creighton University's Heider College of Business, told Insider. "While food delivery is popular in the COVID world, there is a strong likelihood that the service will have lower demand in a post-COVID world," he said, adding that Deliveroo's investors were looking to take advantage of its potential to benefit from the stay-at-home environment.

But that attitude appears to be changing as investors emerge from the pandemic, he said.

Separately, insurers including Aviva, Aberdeen, and Rathbones said they wouldn't invest in Deliveroo because its riders do not get the minimum wage, sick leave, or holiday pay. That in itself made for poor promotion.

Aside from its workers-rights crisis, the poor performance of similar stocks like HelloFresh and JustEat seems to have had an effect on Deliveroo.

"The market is pricing in the impact of the successful UK vaccination campaign, which will lead to a return to restaurants later this year and this will have a negative impact on this entire business model," said Alexander Graf, cofounder of e-commerce tech firm Spryker.

The Amazon-backed company initially saw a lot of fanfare over its IPO. But instead of a contingent of investors rushing in to drive its price higher, the stock slumped. That translates to a paper loss for those retail investors, including its customers and top drivers, who were unlucky enough to have been tempted in and paid the IPO price, said David Morrison, senior market analyst at Trade Nation. The stock may have recovered, but "this is undoubtedly a flop by anyone's standards," he said.

Morrison said this may not have happened to a similar company debuting in the US because UK investors perceive companies differently.

Deliveroo aims to paint itself as a tech disruptor just like Uber, he said. But to many, it's a company with a young workforce dashing around on unlit bikes at night with boxes on their backs in the posher neighborhoods around London.

"That doesn't seem very high-tech to me. Unlike Uber that has scalability, Deliveroo probably won't work outside a big metropolis like London," Morrison said. "Also, it has plenty of competition from the likes of Just Eat and Uber Eats. Finally, it doesn't make money. While that's also been the case for other tech companies, such as Uber and Amazon, what will Deliveroo's future be like once lockdown ends?"