Shareholders of British business Ocado Group (LSE: OCDO) must be one the toughest tribes around. Since its unbelievable, gravity-defying peak in autumn 2020, the Ocado share price has been among the FTSE 350 index’s worst performers. Is any hope left for long-suffering owners?
Go-go Ocado
Ocado was founded in early 2000 by three former investment bankers from Goldman Sachs, including current chief executive (CEO) Tim Steiner. The trio’s business plan was simple, but bold: to use cutting-edge technology to disrupt the world of grocery retailing.
After growing strongly, Ocado listed its stock on the London Stock Exchange in July 2010 at 180p a share. Over time, Ocado’s partners came to include leading retailers in the UK, US, Canada, Australia, Japan, France, Spain, and Sweden.
Ocado’s share price zigzagged along until late 2017, before setting off on a three-year surge. During the Covid-19 lockdowns of 2020/21, Ocado’s home deliveries soared, propelling its stock to new heights.
At their all-time high, Ocado shares peaked at 2,914p on 30 September 2020. This propelled the group into the upper ranks of the elite FTSE 100 index, with its market value exceeding £20bn.
Oh no, Ocado
Throughout 2020 to 2025, I persistently warned that Ocado stock looked wildly overpriced to me. It gives me no pleasure to be proved right, because shareholders have suffered huge losses over the last six years.
As I write, this stock trades at 174p, valuing the grocery-tech chain at under £1.5bn. The shares are down 15.1% over one month and 28.8% over six months. This pattern of declines continues over one year (losing 24.4%) and five years (collapsing by 91.2%). Yikes.
For me, Ocado’s biggest problem is that it remains consistently unprofitable. Despite having 14 retail partners, over 20,000 workers, and more than 3,000 patents backing its ‘pick and pack’ technology, the company has racked up colossal lifetime losses. If it can’t deliver persistent profits after 26 years, then what hope is left?
Is Ocado worthless?
Today, Ocado shares are worth 3.3% less than their launch price 16 years ago, plus they have never paid any cash dividends. This is exactly the kind of listed business I’m keen to avoid. That said, I don’t believe that this stock is worthless and will therefore go to zero.
As a business, Ocado has been a dismal failure for shareholders, but the firm has invested many billions in developing world-beating hardware and software. For me, this is the hidden value at the heart of the company — but who knows its monetary value?
If Ocado were to struggle to raise fresh capital (via new shares or bonds) for investment, then it could be game over for the group. However, I imagine that its proprietary assets might then be bought by some US rival or global player in tech or retail. That said, I’m nowhere near brave enough to back this hunch!
Finally, there may be change to come at the very top of Ocado. ‘Lifetime CEO’ Tim Steiner is rumoured to be stepping down, to be replaced as part of the firm’s long-term succession planning. Unfortunately, this news sent the shares down another 4% today. Is there no end to the suffering for Ocado shareholders?
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Cliff D’Arcy has no position in Ocado Group shares.
