May 17, 2018

Ocado shares extend rise to 80% after US Kroger deal

Ocado's shares extended their surge to trade up as much as 80 per cent in early afternoon trade, after a tie-up with Kroger that takes the British company into the US for the first time quieted short-sellers who doubted it could deliver on international expansion plans. Short interest has been falling, down to 7.2 per cent according to data from the Financial Conduct Authority, down from 13.5 per cent recorded in January. "As one of the most shorted stocks in the UK stock market, this deal will be a poke in the eye for the hedge funds who have bet against Ocado because of its eye-watering valuation," said Laith Khalaf, senior analyst at Hargreaves Lansdown. "However, its share price is looking forward to future earnings based on licensing out its online delivery technology, rather than the revenues it's currently making from food retail. The short sellers were hoping Ocado wouldn't deliver on its international expansion plans, that position now looks like a badly busted flush." By pixel time, Ocado had shed some of those gains to stand up 62 per cent on the day at 893p a share.

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