Gig economy stocks plunge amid EU regulatory crackdown fears
Reuters
Published Dec 06, 2021 10:44
Updated Dec 06, 2021 11:26
LONDON (Reuters) -Speculation that the European Commission is set to propose stricter labour rules to regulate the gig economy have sent shares of companies in the sector sharply lower again on Monday building on losses from last week.
Investors fear the business models of these companies might be jeopardized should the EU's executive arm require them to directly employ drivers and riders.
"The thorny question of whether or not delivery drivers are employees is about to be answered by the EU Commission later this week and reports suggest the answer will be yes", commented Danni Hewson, a financial analyst at AJ Bell.
"For food delivery businesses like Deliveroo and Just Eat that could mean a huge spike in costs, costs which many expect will be passed on to consumers across central Europe", she added.
At 1056 GMT, shares in Deliveroo, Just Eat Takeaway, Delivery Hero were down 6.3%, 5.5% and 4.5% respectively having all also suffered double-digit losses last week.
The regulatory uncertainty about gig economy stocks was illustrated last March when a number of investment funds declined to participate in Deliveroo's initial public offering adding pressure to the stock which plunged when it made its London debut.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown (LON:HRGV) said other factors were also weighing on tech stocks such as expectations of rising interest rates which typically make them financially less attractive for investors.
"Expectations that the restaurant trade won’t be dented so much by the new variant as first thought, is likely to have weighed further", she also said, noting food delivery companies had seen their business and stock valuation increased during the pandemic.
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.