- Ocado shares have exhibited massive bearish bias within the last few months.
- The sell-off stretched on Tuesday following the company’s earnings.
- The situation might worsen in the upcoming months.
Ocado (LON: OCDO) price plummeted by over 12% today. The dip emerged after the firm announced a weak financial statement. That had the stock crashing towards the 700p low, significantly lower than the 981p high of last week.
Ocado’s Struggling Business
Ocado is a well-recognized e-commerce firm. Meanwhile, the company experiences challenge amid the rising cost of operating business due to inflation.
Ocado Group revealed its retail sector generated more than 523 million pounds in sales during the third quarter. That represented a 2.7% surge from 2021’s same quarter and 42% beyond the same in 2019.
Meanwhile, Marks & Spencer and Ocado Group jointly formed Ocado Retail. The business statement revealed that the active customer count increased by 23% year-on-year to above 946K. Consequently, average weekly orders soared by 10.7%.
Nevertheless, the multi-decade high inflations had the shopping basket surging sharply over the last few months. It noted a 6% move to 116 pounds. Meanwhile, the average weekly order climbed to 374K. Ocado’s share price crashed after the firm warned about the cost structure.
It anticipated the energy costs to dent profitability in Q4. Meantime, the company’s executive said that the management stays focused on offering Ocado Retail clients high value to ensure they traverse the living cost crisis. He added that the optimistic underlying trends encourage the company.
Thus, these outcomes cast worries on how investors value Ocado. Remember, customers had previously perceived Ocado as a high-tech growth firm. However, the only 2.7% growth means Ocado isn’t a growth stock. Also, it shows the firm is highly overvalued, considering the 5.75B pounds market cap.
Ocado Share Price Prediction
Ocado stock has witnessed turmoil lately. Sadly, the company saw a worsened situation over the last few days. Meantime, the shares have plunged beneath all moving averages.
Tuesday sessions saw the stock dropping under the bearish flag pattern’s lower side. Also, the Moving Average Convergence Divergence moved beneath the neutral level.