Following fears that the EU would crack down on the gig economy, Deliveroo shares and Just Eat’s fell.
Deliveroo dropped to a new low of 220p. Just Eat declined 4.9 percent, or 216.5p, to 4146.5p.
As speculation swirled about whether the European Commission would propose more strict rules requiring delivery drivers and riders to be directly employed by companies, this led to the sell-off.
Deliveroo fell to record lows of 220p and then closed down 3.1p%, or 7.5%, at 234p. Just Eat dropped 4.9% or 214p to 4146.5p
Delivery staff are often referred to as “independent contractors” by many takeaways. This means that they do not have to offer certain benefits like paid sick leave or workplace pensions.
However, if the EC orders that these workers must be classed as full employees it could jeopardise the firm’s business models by sharply increasing costs and potentially leading to higher prices for customers.
Delivery drivers’ employment has long been an issue of concern. Hundreds of Deliveroo users went on strike earlier in the year to protest their working conditions and pay.
The latest share price tumble also means the company’s shares are now around 43 per cent below their 390p listing price when it made its market debut in April.
The post-float decline has been a painful one for Deliveroo’s biggest shareholder, ecommerce giant Amazon, which has seen around £336million wiped off the value of its 12.4 per cent stake in the group.
Shares in takeaway and other delivery firms have also come under pressure amid hopes the Omicron variant of Covid-19 will not be as bad as initially feared, reducing the chances of another lockdown and, by extension, the need for food to be delivered to people’s homes.
Ocado was affected more by the wider shift. Shares fell 2.7% or 44.5p to 15.82p.
City financier Crispin Odey’s hedge fund, Odey Asset Management, took a nearly 6pc stake in AO World, it disclosed yesterday.
An investor may be interested in buying up stocks of recovery that have fallen recently, but will regain some value over time.
Shares in AO World – which has fallen so much it will soon leave the FTSE 250 – rose 3.6 per cent, or 3.35p, to 96.95p.
The FTSE 100 rose 1.5 percent, or 109.96, to 7232.28, while the FTSE 250 gained 1 percentage point, or 235.25, to 22881.33.
Fading fears of Omicron lifted travel stocks, with British Airways-owner IAG rising 8.1 per cent, or 10.64p, at 142.34p while Holiday Inn operator Intercontinental Hotels added 3.5 per cent, or 157p, to 4701p.
Brent crude rose to $71 per barrel, as oil prices rebounded. Shell shares rose 1.9 percentage points or 31.8p to 1678.4p. BP’s share price rose 1.7 percent or 5.65p at 346.5p.
Omicron’s promise not to disrupt Christmas shopping helped share prices in Primark-owner AB Foods (2.1%), rising 40p to 1970p
Mid-cap shipping firm Clarkson floated up 4.8 per cent, or 175p, to 3860pp after hiking its full-year forecasts following ‘continued strong trading’ in its second half.
The group now expects its results for 2021 to be ‘ahead of current market expectations’ with profits of at least £65million.
Thungela Resources, a South African coal miner, saw its share of 15.8%, or 52.5p to reach 385.9p. This was due to rising demand, as the world economy continues to recover from the Covid pandemic.