Ocado Share Price Forecast: Extremely Vulnerable

The Ocado share price is hovering near the lowest level since April 2020 as investors remain pessimistic about the company’s outlook. The OCDO stock has dropped by more than 40% from its highest level this year. This brings its total market capitalisation to more than 12.3 billion pounds. 

Why Ocado shares have dropped

There are several reasons why the Ocado share price has been in a major downward trend lately. First, investors are afraid that the company will not be able to sustain its remarkable growth as the UK and its other core markets reopen. 

Second, the company recently reported some relatively weak financial results. Its sales declined by about 11% in the quarter through August as demand for its products faded. 

Third, like other companies in the logistics industry, Ocado has struggled with finding truck drivers. The UK is estimated to need more than 100k truck drivers. And, the recent decision by the government to offer temporary visas to foreigners has been criticized for being not enough. 

Additionally, the company faced additional costs worth more than $50 million because of a fire that happened in July in its Erith warehouse. Also, the company is facing significant competition from companies that promise almost instant deliveries. There are also concerns about the company’s lack of profitability. 

Ocado share price forecast 

The daily chart below shows that the Ocado share price formed a double-top pattern at 2,885p between September 2020 and January this year. The neckline of this double top pattern was at 2,145p. It then formed another double-top pattern at 2,092p. It is currently trading slightly below the neckline of this double top pattern. At the same time, thr 25-day and 50-day exponential moving averages have made a bearish crossover. 

Therefore, there is s likelihood that the stock will keep falling in the near term. If this happens, the next key level to watch will be the support at 1,500p. On the flip side, a move above 1,800p will invalidate the bearish view. 

Ocado Share Price