Deliveroo riders strike as retail shares start trading
The Independent Workers’ Union of Great Britain (IWGB) said hundreds of its members are keeping their bikes parked for fair pay, safety protections and basic workers’ rights.
It said that when the food service app wants to terminate a rider and remove access to the app, “there is no clear appeal process with many requests being completely ignored”.
Socially distanced protests are also planned in London, York, Sheffield, Reading and Wolverhampton.
— alex marshall (@alexjkmarshall) April 7, 2021
Supportive action is expected internationally in Australia, France, Netherlands, Ireland and Spain with local organisations, the union said.
— Kevin Brennan MP (@KevinBrennanMP) April 7, 2021
The initiative is also backed by 71 MPs who last November signed a motion condemning the “opaque and unjust process” of app-based services in the so-called ‘gig economy’.
The MPs noted that couriers are key workers who “are working on the frontline of the covid-19 pandemic and are often putting their own health at risk in the process”, while the company’s practice of dismissal is leaving many of them “on low-incomes facing potential destitution”.
Wednesday was the first day when the 70,000 retail investors who signed up for IPO shares on PrimaryBid were allowed to trade.
Instead, institutional investors were permitted to trade share since the market debut last week.
There were fears that the retail investors who participated in the float would offload their new holdings, but instead there are holding on, which may explain the share price rise.
“I’m not sure if this is a vote of confidence or a case of averaging in, but it’s no doubt a big relief to management and the bankers involved that the retail army has not routed at the first sound of gunfire,” said Neil Wilson at Markets.com.
“Given the wipe-out that has already taken place, I think a lot of investors will simply think that it cannot go any lower and it’s worth holding on for a better price. Cutting losers is harder than letting winners run.”
The investment bank should have made a profit since it had been carried out with the ‘overallotment’ reserved for the IPO, but the profits will be surrendered to Deliveroo as part of an agreement which has not been disclosed.
Meanwhile, some hedge funds have already shorted the stock, according to reports from last week.
A messy IPO
The tech unicorn launched a disappointing IPO last Wednesday, as it placed 384mln shares at 390p each, but the stock plunged 271p hours after opening.
There has been bad publicity after a governance scandal prompted big investors to declare publicly they wouldn’t subscribe for any shares, including Aviva, BMO Global, CCLA, Legal & General, Rathbones, Hargreaves Lansdown and Aberdeen Standard.
Aside from ESG concerns, the market is also spooked by the profit outlook, as the firm has remained loss-making despite a boom in takeaways when people were forced to stay home during lockdowns for the past year or so.
Another concern is its dual share structure, since it will enable founder Will Shu to exercise more control over the business while public.
That’s because Deliveroo pays its riders, in a similar way to Uber Eats, which adds more charges on the balance sheet, while Just Eat, instead, operates on a marketplace model where it takes a commission for the order but leaves it to the restaurant to deliver.
It also makes it more difficult to compete outside major centres, where they may be fewer freelance riders available.
Shares were up 2% to 286.39p at lunchtime, a 27% drop compared to the IPO price.