Shares in UK online retailer Ocado slid to a new low today (19 August), just a month after the grocer launched its IPO.
The company’s stock stood at 163p (US$0.255) when the company made its stock market debut last month, however shares slumped to 140.25p at 12.31 BST today (19 August).
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Ocado had cut its target price to 180p less than a day before the retailer was due to list after not enough investors accepted the initial range of 200p to 275p.
Verdict Research analyst Neil Saunders told just-food that the weakness in the share price reflects a lack of confidence in Ocado’s future earnings potential and underlines continued worries over the profitability of the business model.
“While I believe investors are confident that Ocado will grow sales, especially when the development of their new warehouse is completed, there is more of a question mark over underlying profitability,” Saunders said.
“This fuels the view that even at the lower rate at which it floated, the company was still overvalued,” he added.
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