Delivery Hero Stock: Spanish Labor Reform Triggers Sharp Decline

Delivery Hero's subsidiary Glovo is undertaking a significant transformation of its business model in Spain, announcing plans to convert approximately 15,000 delivery drivers from freelancers to permanent employees across more than 900 cities. This strategic shift, prompted by pressure from Spanish labor authorities, has sent shockwaves through the market, resulting in a dramatic 10% drop in Delivery Hero's stock price to €35.05. The company anticipates this transition will impact Glovo's adjusted EBITDA by around €100 million in 2025, while contingent liabilities are expected to surge to between €440 and €770 million.

Financial Outlook

Despite the substantial financial implications of this restructuring, Delivery Hero maintains its commitment to its 2024 group forecast. The company projects that Glovo's Spanish operations will still achieve positive adjusted EBITDA in 2025, even with the additional costs associated with the employment model change. The anticipated payments, covering social security contributions, penalties, and VAT claims, are scheduled to commence from the second quarter of 2025.