Ocado shares lost 20% of their value yesterday in the worst fall in 11 years as it was downgraded by a City broker.
Almost £1.4bn of the group’s value was wiped off as the stock dropped 19.9% and £32m was shaved off the stake held by chief executive Tim Steiner, This is Money reported.
Ocado saw its share price hit a record 2,895p in September 2020 as its retail business, which is half-owned by M&S, saw a boom in consumer demand during the pandemic.
Its value then plummeted by almost 80% in June this year to 343p as shoppers started to abandon online and head back to stores since Covid-19 restrictions eased.
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Ocado has rallied in recent weeks and had been trading above 800p before yesterday.
However, BNP Paribas Exane analyst Andrew Gwynn downgraded his recommendation for the online supermarket to ‘underperform’ from ‘neutral’.
In his note, Gwynn said this came as a result of its recent rally, explaining: “Ocado has doubled since we moved to neutral from underperform in June so having argued the risk-reward has become more-balanced, it seems now to be out of kilter again.”
The group’s retail business was under pressure in July as Steiner said the joint venture with M&S was “not where we wanted it to be”, and M&S chairman Archie Norman added that he was “not happy” with the retailer’s performance in the first half of 2023.
However, Ocado posted a rise in sales of 7.2% to £569.6m in the third quarter, and the grocer saw a return to positive volume growth in the last month of the quarter, with the average basket value up 4.2%.
