The Ocado Group PLC (LON: OCDO) share price has fallen 22% in a month amid fears that it would be relegated from the premier FTSE 100 index and replaced by another firm. The most likely firm to replace Ocado is IMI Plc, an engineering firm currently part of the FTSE 250 index.
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The online grocery firm had seen its shares rally in 2020 during the COVID-19 lockdowns as people ordered their groceries online, pushing its share price to a high of 2,895p in September 2020, but things have since changed since the lockdowns ended, and people got back to shopping in supermarkets.
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The company also sells robotic warehouse technology, whose demand has been weaker than expected, causing the company to report a loss of over £500 million in the past financial year. Ocado shares rallied higher in 2018 after being selected to help build the warehouse infrastructure for Kroger, a leading US grocery chain.
There has been a lack of big deals for Ocado in the recent past lowering its profile as a leading grocery technology infrastructure provider largely because once a customer has installed such infrastructure, they may not need to install it again.
The removal of the Ocado group from the FTSE 100 is a blow to the UK tech industry as a whole, given the lack of tech IPOs, which threatens the UK’s position as a leading hub for tech companies following Brexit.
However, on a positive note, company insiders have been buying shares in the company even as they fell, showing their confidence in the firm’s prospects. For example, the biggest insider buying came from the Independent Non-Executive Director Jorn Rausing, who bought UK£4.7 million shares at the Ocado share price of 668p.
The question remains, Can Ocado shares recover? The short answer is yes, they can, but it is unlikely that we will see the all-time high prices of 2020.
*This is not investment advice.
Ocado share price.
The Ocado share price has fallen 22.03% in the past month as it faces relegation from FTSE100.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.