Gig economy stocks plummet after anticipated EU regulatory crackdown

Gig economy firms are seeing stocks slide after a widely anticipated EU regulatory clampdown which aims to regulate the gig economy is expected to become law.

Investors have reacted badly to the news, fearing the collapse of the widely successful business model should the EU’s executive arm ruling 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”, AJ Bell financial analyst Danni Hewson told Reuters.

“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.”

READ MORE: Deliveroo IPO dubbed “worst in London’s history” as billions wiped off its value

Deliveroo, Just Eat and Delivery Hero all saw their share price plummet, having all three suffered double-digit losses last week.

A number of investment firms declined to participate in Deliveroo’s highly anticipated London-based, initial public offering (IPO), costing the company millions of pounds.xpectations of rising interest rates which typically make them financially less attractive for investors.

Hargreaves Lansdown senior investment and markets analyst Susannah Streeter added: “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.

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