Ocado (LON: OCDO) share price has imploded in the past few years as concerns about its revenue and profitability growth continue. It has crashed to 360p, down from its all-time high of 2,910p in 2020. Its market cap has plummeted from over £20 billion to just £2.9 billion today
Ocado’s shares have plunged as investors question its joint venture with Marks and Spencer. There are signs that the relationship is not working out fine. In a recent statement, the head of MKS said that he was not happy with the JV and that there was work to do to boost sales and profitability.
There are also concerns about the company’s warehousing and logistics business. While this business is growing modestly, it has struggled to become profitable.
The most recent annual results showed that Ocado Group’s revenue rose from £2.5 billion in 2022 to over £2.825 billion. Most of this revenue growth came from its technology solutions business whose revenue rose to £429 million.
Ocado share price chart
The challenge is that the company made substantial losses in 2023. Total loss before tax came in at £400 million in 2023, down from £500 million a year earlier. While Ocado is making some improvements, including cost cuts, it is unclear when it will become profitable.
Therefore, this performance could lead to the company being booted from the FTSE 100, an index that tracks the biggest companies in the UK.
Unlike other indices, the Footsie is usually reconstituted using a market cap basis. This reconstitution is done each quarter in March, June, September, and December. Therefore, if the Ocado share price remains this low, it will likely be the next company to be removed from the index. Ocado is the second-smallest company in the FTSE 100 index after St. James Place. It has a market cap of £2.9 billion.
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