Tasty court ruling for Deliveroo investors
DELIVEROO shares raced ahead as the takeaway app won the latest showdown in a long-running legal battle about the status of its riders.
Senior judges ruled its ‘roos’ can be classed as self-employed contractors rather than ‘workers’ – meaning the company need not provide them with the same rights as staff such as sick pay and annual leave.
This is the fourth time a court – this time the Court of Appeal – has ruled in Deliveroo’s favour.
The company has been fighting a case dating back to 2017, brought by the Independent Workers Union of Great Britain.
The decision is a big win for Deliveroo whose float flopped in March amid questions from institutional investors over the company’s business model and status of its riders.
The classification of people working in the so-called ‘gig economy’ has been a hotly debated over the last few years.
In February the Supreme Court ruled that Uber drivers be classed as workers, giving them access to the minimum wage and paid holidays. Meanwhile, Deliveroo rival Just Eat Takeaway has decided to adopt an employment model in order to avoid any controversy and negative press.
But Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown warned that the latest Deliveroo judgment does not mean the gig economy battle is over.
Streeter said Deliveroo may yet be forced to change its model by investors who are becoming increasingly aware about societal issues, like workers rights.
When it went public, Deliveroo had warned that it might not be successful in defending its contractor model. Nevertheless shareholders celebrated yesterday, sending its stock soaring 9.3pc, or 23.3p, to 274.9p – still falling short of the 390p listing price, however.
Just Eat Takeaway was trading higher too, rising 2.7pc, or 171p, to 6,573p by the close.
Mid- cap housebuilder Crest Nicholson also had a bumper day after it told investors profits would be higher than expected because of the property market boom.
The company estimates it will make more than £100m this year after making £36.3m in the six months to April 30, which was boosted by home sales rocketing 31pc to 1,017.
Shares in Crest Nicholson rose 1.1pc, or 4.8p, to 435.2p.
The optimism was contagious, with fellow builders Vistry (up 0.4pc, or 5p, to 1213.5p) and Berkeley Group (up 1.1pc, or 50p, to 4668p) also advancing.
Elsewhere, Royal Mail was in investors’ good books, climbing 1.8pc, or 10.2p, to 589p after revealing it wants to recruit 1,000 postie apprenticeships.
Participants will be offered a permanent job if they successfully complete the 13-month scheme, it said. But it was a less well known name, Chrysalis Investments, that shot to the top of the FTSE 250 leaderboard.
Its stock rose 4.9pc, or 12p, to 255p after announcing it has invested £35m in Starling Bank.
Turnover at the fast-growing online bank – which is led by Anne Boden – rose by 400pc last year.
Chrysalis’ rise wasn’t enough to keep the wider index in the black, however. The FTSE 250 fell 0.7pc, or 149.3 points, to 22,510.12, while the FTSE 100 rose 0.5pc, or 35.91 points, to 7,109.97.
Scottish Mortgage Investment Trust ( up 1.8pc, or 23p, to 1,291.5p) was one of the blue-chip climbers as the Nasdaq set another intraday record high.
Scottish Mortgage is one of the main investment trusts in the UK for US technology companies such as Tesla, Apple and Google-owner Alphabet, which are all listed on the Nasdaq.
Baillie Gifford US Growth Trust followed suit, rising 2.2pc, or 7.5p, to 343.5p.