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Ocado: best before end?

The online grocer’s stunning performance on the market belies uncertainty ahead
Ocado: best before end?
  • Ocado’s soaring share price defies “financial physics”
  • The firm faces increasing competition, following relatively modest growth in online food shopping during the pandemic

Ocado (OCDO) may be a hit with the investor class, but you are left wondering whether there are some distinctly ambitious assumptions baked into the market valuation. Shares in the company have soared 117 per cent over the past year alone, as traders bet coronavirus lockdowns would push more shoppers to join the club.

But most ordinary folk haven’t got on board. Ocado grabbed just 1.7 per cent of the UK market last year, according to consultancy Kantar. The bull case is that the company, recently rebranded as a tech firm, can sell its delivery technology to bigger supermarkets. But online food shopping, though at record levels, has not caught on during lockdown, at least relative to some other retail segments, doubling from an 8 per cent market share to an unspectacular 16 per cent, Nielsen found. 

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