Deliveroo shares jump as trading opens to retail investors, while hundreds of riders begin protests in the UK over low pay and working conditions
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- Deliveroo shares rose Wednesday as the company opened trading to retail investors.
- On the same day, about 400 riders are staging protests in the UK as they call for higher pay and benefits.
- Goldman Sachs bought $103 million in Deliveroo shares to boost its stock after a disappointing IPO.
- See more stories on Insider's business page.
Deliveroo shares rose 4% on Wednesday as the company opened trading to retail investors, a week after going public on the London Stock Exchange to institutional participants only.
The food-delivery group's shares opened at 288 pence ($3.96), giving it a market value of £5.2 billion ($7.2 billion). That is down from the £7.6 billion ($10.5 billion) valuation its IPO was priced.
Further turbulence is expected for Deliveroo's shares as about 70,000 retail investors begin trading their stock.
Separately, some 400 Deliveroo riders are staging socially-distanced strikes on the same day that it opened up trading to amateur investors.
Protests over what they describe as poor working conditions and low pay will take place in London and four other cities in the UK, according to a statement by the trade union Independent Workers' Union of Great Britain.
The riders are revolting less than two weeks after The Bureau of Investigative Journalism revealed that some riders earn as little as £2 ($2.76) per hour for delivering food to customers, far below the minimum wage.
"I'm going on strike for my basic rights and those of all the other riders struggling to get by and support families on Deliveroo poverty pay," Greg Howard, a Deliveroo rider and chair of the union's couriers and logistics branch, said in a statement.
Howard said he has seen work conditions at Deliveroo decline for years. After working through the lockdown, he said he became infected with the coronavirus and got "very little support" from the company. On its site, Deliveroo says it offers a relief fund for infected riders.
Another rider, Ethan Bradley, told the Big Issue: "I don't know if I'm going to be able to make the rent next week, or pay the bills. Many riders have family, have dependents and have kids to feed," adding that security of earnings "would mean so much to them."
A Deliveroo spokesperson told Insider that the "small self-appointed" union does not represent a majority of riders who tell the company they value its flexibility and an ability to earn over £13 ($17.9) an hour.
"We are proud that rider satisfaction is at an all-time high and that thousands of people are applying to be Deliveroo riders each and every week. Riders are at the heart of our business and today we are beginning a new consultation with riders about how we should invest our new £50 million community fund," the spokesperson said in a statement.
Shares in Deliveroo tumbled by more than 30% at its stock market debut on March 31, when only institutions were allowed to participate. The Financial Times said its IPO has been dubbed "the worst in the history of the London market."
The food-delivery group may have waited too long to capitalize on the IPO frenzy for COVID-19 stock winners.
Goldman Sachs, one of Deliveroo's underwriters, bought shares worth £75 million ($103 million) to boost its stock after its IPO dwindled, the FT reported on Tuesday.
The result of Deliveroo's IPO was deflating for many investors in UK tech, according to Christian Nentwich, founder of financial tech firm Duco. He told Insider that although there are lots of good arguments about whether the IPO's pricing was rightly set over workers' rights and future business risk, "frankly, no one cares in other companies, outcomes matter."
"Protests about dual-control structure, about the strategy of burning cash to fuel growth, and so on, are irrelevant - companies can simply list elsewhere," he said.
But brands are as strong as their weakest link and for Deliveroo, problematic worker practices are its biggest challenge, said Sophie Lord, executive director of strategy at brand consultant firm Landor & Fitch.
"Major investment houses are looking at ESG seriously and have made it clear, they won't tolerate a failure to engage. Whether the brand now has the lifeforce to overcome the scrutiny, time will tell - as will its share price," she said.
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