Ocado’s share price has continued to fall, making it one of the UK’s top companies. It has plummeted to just 306p after reaching a high record of 2,913p by 2020. The value of the stock has been wiped out by billions over the last few years.
Ocado shares have plunged in price
Ocado Group, a technology company in the UK, is one of its biggest. The company offers a variety of solutions including technology, retail and logistics.
Ocado Retail, an online grocery store that serves about 80% UK households. The joint venture is 50/50 with Marks & Spencer.
It also runs a logistic business that provides fulfillment and delivery services for Ocado Retail, as well as other retailers like Morrisons.
Ocado builds automated warehouses with its technology solutions. It has more than 3,000 patents. Among the companies in Ocado’s ecosystem are Kroger, Sobeys Groupe Casino Coles Group and Aeon.
Ocado’s share price is down despite modest growth in revenue during this time period. Last year’s revenues were over PS3.16billion, a significant increase from PS2.8billion a year before. The company’s revenues were PS1.4 billion.
Ocado’s losses are one of the reasons why its stock has fallen. Pre-tax losses were down to PS375m from PS394m a year ago. Ocado’s total annual loss increased to more than PS1.74 billion.
Recent results show that revenue increased by 13% in the first six months of the year to PS674million. The revenue from technology solutions rose 15%, to PS277 millions. Logistics rose 12%, to PS397million.
Ocado Retail’s revenue continued to grow in the first half of the year as revenue increased. The revenue grew by 16 percent to PS1.6billion, and the gross profit increased by 15 percent to PS509million.
The retail segment EBITDA of Ocado jumped from PS33 to PS33. The average weekly order rose 14%, to PS491million, and the basket of orders rose from PS124 to PS124.
Positively, there is a clear path for the company to achieve a positive cash flow. The company’s cash flow improved from PS201 to PS108 in the first half of the year. It reaffirmed their guidance, and hopes that they will become cash-flow positive by next year.
Ocado stock price technical analysis
Weekly chart showing OCDO’s stock in a downward trend for the last few months.
Ocado’s performance has been below the Exponential Moving average for the past 100 weeks, which is a good sign the downward trend continues. Recent attempts by Ocado to recover failed on that moving average.
The Relative Strength Index has fallen and is on the verge of moving below neutral at 50.
The stock’s chart has formed an ascending wedge pattern. The pattern is composed of two converging and descending trendlines and may be poised to test the upper edge. Break-and-retest patterns are a bullish continuation signal.
Ocado’s share price is expected to drop by 25 % from its current level, and will then rise later in the year.
If the stock continues to rise, it could also break through the 395p resistance level and reach its highest point of the year.
This article Ocado Share Price Analysis: Is this fallen angel an buy? This post may change as new information becomes available
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