Deliveroo Shares Stumble as Trading Begins: Live Updates

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LiveUpdated March 31, 2021, 5:34 a.m. ETMarch 31, 2021, 5:34 a.m. ET
Deliveroo is now in 12 countries and has over 100,000 riders.
Deliveroo is now in 12 countries and has over 100,000 riders.Credit…Toby Melville/Reuters

Deliveroo, the British food delivery service, dropped as much as 30 percent in its first minutes of trading on Wednesday. The company had set its initial public offering price at 3.90 pounds a share, for a market value of GBP7.6 billion or $10.4 billion. But it first traded at GBP3.31, 15 percent lower, and kept falling.

It’s a gloomy public debut for the company that was promoted as a post-Brexit win for London’s financial markets. Its offering has been beset by major investors planning to sit out the I.P.O. amid concerns about shareholder voting rights and Deliveroo rider pay. Deliveroo is trading under the ticker “ROO.”

The business model of Deliveroo and other gig economy companies is increasingly under threat in Europe as legal challenges mount. Two weeks ago, Uber reclassified more than 70,000 drivers in Britain as workers who will receive a minimum wage, vacation pay and access to a pension plan, after a Supreme Court ruling. Analysts said the move could set a precedent for other companies and increase costs.

Deliveroo, which is based in London and was founded in 2013, is now in 12 countries and has over 100,000 riders, recognizable on the streets by their teal jackets and food bags. Last year, Amazon became its biggest shareholder.

Demand for Deliveroo’s services could soon diminish, as well, as pandemic restrictions in its largest market, Britain, begin to ease. In a few weeks, restaurants will reopen for outdoor dining. Last year, Deliveroo said, it lost GBP226.4 million even as its revenue jumped more than 50 percent to nearly GBP1.2 billion.

Last week, a joint investigation by the Independent Workers’ Union of Great Britain and the Bureau of Investigative Journalism was published based on invoices of hundreds of Deliveroo riders. It found that a third of the riders made less than GBP8.72 an hour, the national minimum wage for people over 25.

Deliveroo dismissed the report, calling the union a “fringe organization” that didn’t represent a significant number of Deliveroo riders. The company said that riders were paid for each delivery and earn “GBP13 per hour on average at our busiest times.” In Britain, Deliveroo has 50,000 riders.

On Monday, shares traded hands in a period called conditional dealing open to investors allocated shares in the initial offering. The stock is expected to be fully listed on the London Stock Exchange next Wednesday and can be traded without restrictions from then.

An H&M store in Beijing on Tuesday. The retailer’s chief executive, Helena Helmersson, said H&M had a “long-term commitment” to China.Credit…Kevin Frayer/Getty Images

More than a week after the Swedish retailer H&M came under fire in China for a months-old statement expressing concern over reports of Uyghur forced labor in the region of Xinjiang, a major source of cotton, the company published a statement saying it hoped to regain the trust of customers in China.

In recent days, H&M and other Western clothing brands expressing concern over reports coming out of Xinjiang, including Nike and Burberry, have faced an outcry on Chinese social media, including calls for a boycott endorsed by President Xi Jinping’s government. The brands’ local celebrity partners have terminated their contracts, Chinese landlords have shuttered stores and their products have been removed from major e-commerce platforms.

Caught between calls for patriotism among Chinese consumers and campaigns for conscientious sourcing of cotton in the West, some other companies, including Inditex, the owner of the fast-fashion giant Zara, quietly removed statements on forced labor from their websites.

On Wednesday, H&M, the world’s second-largest fashion retailer by sales, published a response to the controversy as part of its first quarter 2021 earnings report.

Not that it said much. There were no explicit references to cotton, Xinjiang or forced labor. However, the statement said that H&M wanted to be “a responsible buyer, in China and elsewhere” and was “actively working on next steps with regards to material sourcing.”

“We are dedicated to regaining the trust and confidence of our customers, colleagues, and business partners in China,” it said.

During the earnings conference call, the chief executive, Helena Helmersson, noted the company’s “long-term commitment to the country” and how Chinese suppliers, “at the forefront of innovation and technology,” would continue to “play an important role in further developing the entire industry.”

“We are working together with our colleagues in China to do everything we can to manage the current challenges and find a way forward, ” she said.

Executives on the call did not comment on the impact of the controversy on sales, except to state that around 20 stores in China were currently closed.

H&M’s earnings report, which covered a period before the recent outcry in China, reflected diminished profits for a retailer still dealing with pandemic lockdowns. Net sales in the three-month period through February fell 21 percent compared the same quarter a year ago, with over 1,800 stores temporarily closed.

The stunt comes as the company is promoting its new ID.4 electric S.U.V. in the United States.
The stunt comes as the company is promoting its new ID.4 electric S.U.V. in the United States.Credit…Ronny Hartmann/Agence France-Presse — Getty Images

Contrary to what you may have read, Volkswagen has not changed its name.

The company’s U.S. operation caused a stir with an announcement on its website that it planned to call itself Voltswagen to emphasize its push into electric vehicles as it rolls out its first electric sport-utility vehicle in the United States — the ID.4. The change came ahead of April Fool’s day — a favorite time of year for companies to try to grab a share of the social media conversation, such as when IHOP tried to convince the world it was changing its last letter to B, as in burgers.

“At the end of the day, it was a bit of fun with the name and the brand,” a Volkswagen spokesman, Mark Gillies, said. “We wanted to reinforce what we are messaging about the ID.4.”

Word of the name change surfaced on Monday when a news release announcing the name change was published on the company’s website for about an hour before disappearing. CNBC, USA Today and others reported on the news release, saying it was dated April 29 and appeared to have been accidentally posted a month early.

On Tuesday, the company posted a new statement dated March 30 about the name change, sparking a flurry of comments and speculation on social media. Late Tuesday afternoon, Volkswagen officials in Germany, where the company is based, acknowledged it was a marketing tactic.

The company’s Twitter account was changed Tuesday morning to show a logo with the new name, but the company’s website continued to use the old name.

The new name was written in a fluorescent blue typeface similar to the font General Motors chose for a new logo it unveiled in January. G.M.’s logo was intended to have the same effect — to emphasize its commitment to electric vehicles.

G.M. has said it aims to make only electric vehicles by 2035. Volkswagen has said it will no longer develop new gasoline engines a few years from now.

Volkswagen needs to make a splash if it wants to sell a lot of electric cars in the United States. Tesla dominates the market for now, while Ford Motor has gained ground with the Mustang Mach-E electric S.U.V. that has been delivered to several thousand drivers.

Changing the name of an automaker as established as Volkswagen would clearly be a huge undertaking, and not just for the company. Its dealers would have to spend millions of dollars to rebrand their franchises.

“I don’t know anything about it,” said Jason Kuhn, owner of two Voltswagen, nee Volkswagen, dealerships near Tampa, Fla. said on Tuesday before the company admitted it was just having fun. “I’ve read it. I really can’t comment.”

Kenneth Chenault, left, a former chief executive of American Express, and Kenneth Frazier, the chief executive of Merck, organized a letter signed by 72 Black business leaders.
Kenneth Chenault, left, a former chief executive of American Express, and Kenneth Frazier, the chief executive of Merck, organized a letter signed by 72 Black business leaders.Credit…Left, Justin Sullivan/Getty Images; right, Spencer Platt/Getty Images

Seventy-two Black executives signed a letter calling on companies to fight a wave of voting-rights bills similar to the one that was passed in Georgia being advanced by Republicans in at least 43 states.

The effort was led by Kenneth Chenault, a former chief executive of American Express, and Kenneth Frazier, the chief executive of Merck, Andrew Ross Sorkin and David Gelles report for The New York Times.

The signers included Roger Ferguson Jr., the chief executive of TIAA; Mellody Hobson and John Rogers Jr., the co-chief executives of Ariel Investments; Robert F. Smith, the chief executive of Vista Equity Partners; and Raymond McGuire, a former Citigroup executive who is running for mayor of New York. The group of leaders, with support from the Black Economic Alliance, bought a full-page ad in the Wednesday print edition of The New York Times.

“The Georgia legislature was the first one,” Mr. Frazier said. “If corporate America doesn’t stand up, we’ll get these laws passed in many places in this country.”

Last year, the Human Rights Campaign began persuading companies to sign on to a pledge that states their “clear opposition to harmful legislation aimed at restricting the access of L.G.B.T.Q. people in society.” Dozens of major companies, including AT&T, Facebook, Nike and Pfizer, signed on.

To Mr. Chenault, the contrast between the business community’s response to that issue and to voting restrictions that disproportionately harm Black voters was telling.

“You had 60 major companies — Amazon, Google, American Airlines — that signed on to the statement that states a very clear opposition to harmful legislation aimed at restricting the access of L.G.B.T.Q. people in society,” he said. “So, you know, it is bizarre that we don’t have companies standing up to this.”

“This is not new,” Mr. Chenault added. “When it comes to race, there’s differential treatment. That’s the reality.”

The Ever Given cargo ship was stuck in the Suez Canal nearly a week.
The Ever Given cargo ship was stuck in the Suez Canal nearly a week.Credit…Agence France-Presse — Getty Images

The traffic jam at the Suez Canal will soon ease, but behemoth container ships like the one that blocked that crucial passageway for almost a week aren’t going anywhere.

Global supply chains were already under pressure when the Ever Given, a ship longer than the Empire State Building and capable of carrying 20,000 containers, wedged itself between the banks of the Suez Canal last week. It was freed on Monday, but left behind “disruptions and backlogs in global shipping that could take weeks, possibly months, to unravel,” according to A.P. Moller-Maersk, the world’s largest shipping company.

The crisis was short, but it was also years in the making, reports Niraj Chokshi for The New York Times.

For decades, shipping lines have been making bigger and bigger vessels, driven by an expanding global appetite for electronics, clothes, toys and other goods. The growth in ship size, which sped up in recent years, often made economic sense: Bigger vessels are generally cheaper to build and operate on a per-container basis. But the largest ships can come with their own set of problems, not only for the canals and ports that have to handle them, but for the companies that build them.

“They did what they thought was most efficient for themselves — make the ships big — and they didn’t pay much attention at all to the rest of the world,” said Marc Levinson, an economist and author of “Outside the Box,” a history of globalization. “But it turns out that these really big ships are not as efficient as the shipping lines had imagined.”

Despite the risks they pose, however, massive vessels still dominate global shipping. According to Alphaliner, a data firm, the global fleet of container ships includes 133 of the largest ship type — those that can carry 18,000 to 24,000 containers. Another 53 are on order.

A.P. Moller-Maersk said it was premature to blame Ever Given’s size for what happened in the Suez. Ultra-large ships “have existed for many years and have sailed through the Suez Canal without issues,” Palle Brodsgaard Laursen, the company’s chief technical officer, said in a statement on Tuesday.

  • Some of the most vulnerable Americans still haven’t gotten their stimulus checks, but millions of them who receive federal benefits should get their payments next week, according to the Internal Revenue Service. People who receive benefits from Social Security, Supplemental Security Income, the Railroad Retirement Board and Veterans Affairs — but do not file tax returns because they don’t meet the income thresholds — were among those who faced delays. But most of them, with the exception of those receiving benefits from Veterans Affairs, could have their payments arrive by direct deposit on April 7.

  • About a million student loan borrowers who were left out of earlier relief efforts are getting a reprieve — but only if they defaulted on their loans. The Education Department said on Tuesday that it will temporarily stop collecting on defaulted loans that were made through the Family Federal Education Loans program and are privately held. The change, however, still leaves millions of other borrowers in that program responsible for payments while the bulk of the country’s student loan borrowers have had theirs paused.

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