Ocado share price is rising: Here’s why you should avoid it

June 20, 2023 02:15 AM PDT | By Invezz

Ocado share price is rising: Here’s why you should avoid it — Image source: Invezz

Karakuri collapse

The main reason why Ocado share price retreated sharply was news that Karakuri was on the verge of collapse after failing to raise additional capital. Karakuri is a British company that provides robotics services. Ocado Group is one of the biggest shareholders of the company. In a statement, the firm said:

“As a result, as of Monday, we will begin to wind down our operations and are working with external advisors on the next steps.”

Karakuri’s collapse comes at a time when Ocado is facing major headwinds in its key industries. The most recent UK retail sales numbers showed that the country’s e-commerce sales were falling after peaking during the pandemic.

Meanwhile, Ocado Solutions is seeing less demand. After adding South Korea’s Lotte Shopping as a customer in 2022, the company has not added any other retailer this year. This means that the service’s business will continue slowing down this year.

The most recent results showed that Ocado Retail was not doing well. Its first-quarter revenue jumped by just 3.4% in the first quarter to £583.7 million while the average basket size dropped from 49 to 45. The number of active customers during the period rose to 951k.

The challenge for Ocado is that the company’s investments in warehouses has pushed losses sharply higher. Its loss jumped to over £501 million in 2022 from the previous £176.9 million. Losses will likely narrow this year after the company paused the building of new warehouses.

Ocado share price forecast

OCDO chart by TradingView

I have been critical of Ocado stock price, as you can read here. On the daily chart, we see that the shares managed to move slightly above the important resistance point at 376.4p this month as it staged a strong recovery. This price was important since it was the lowest level in October last year.

Despite the double-digit gains, Ocado share price remains below the 50-day and 100-day exponential moving averages (EMA). It is also below the descending trendline shown in green. Therefore, the shares will likely continue falling as sellers target the next support at 376.4p.

The post Ocado share price is rising: Here’s why you should avoid it appeared first on Invezz.

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media LLC (Kalkine Media, we or us) and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures/music displayed/used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it, as necessary.