Shares of Ocado Group PLC (LON: OCDO) fell 4.74% after a fire at one of its warehouses caused by the collision of three robots forced the company to cancel thousands of customer orders as the warehouses remained closed on Monday.
The company, which relies on a network of robots to sort, pack and fulfil customer orders instead of human employees, saw operations at the warehouse grind to a stop after the fire, forcing it to reroute customer orders to its other warehouses.
Ocado’s shares have fallen 23.8% this year amid investor concerns about whether it shall maintain last year’s high levels of profitability as the UK reopens its economy allowing people to shop in malls and other high street establishments.
The UK had lifted the remaining COVID-19 restrictions today, which means that the country’s economy is now operating almost precisely how it was before the pandemic struck.
Many experts have warned that the country risks a surge in infection rates, but the British Prime Minister has insisted that if they don’t lift the restrictions now, they might as well forget about ever lifting them.
Ocado’s sales are likely to take a hit due to the reopening of the UK economy and the closure of its warehouse, which could lead its shares to fall further.
However, all is not lost for the company, given that many people are not going to entirely abandon their online shopping behaviours following the pandemic-induced lockdown measures.
Investors will be waiting for Ocado’s following earnings report to see how it will fare after the UK economy reopens, which could set the tone for its future results.
From a technical perspective, Ocado shares are likely to keep falling since the next significant support level is pretty far from its current prices. Therefore, I would not be opening any new bullish positions at current prices.
*This is not investment advice.
Ocado share price.
Ocado shares plunged 4.74% to trade at 1718.75p, falling from Friday’s closing price of 1804.25p.