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Ocado Share Price Forecast: Is OCDO a Good Buy Now?

Ocado share price is still in a consolidation phase as investors reflect on the company’s fundraising to find growth. The OCDO stock is trading at 855p, which is significantly higher than the year-to-date low of 700p. This price is about 72% below its all-time high. 

E-commerce stock rout

E-commerce and retail stocks listed in the London Stock Exchange (LSE) have had a terrible year as the cost of doing business rises and growth retreats. Last week, Boohoo and Asos share prices collapsed by more than 10% after they provided weak guidance to the market. Similarly, the Royal Mail share price has plummeted sharply this year.

Ocado has not been left behind in this sell-off as investors worry about the company’s growth and lack of profitability. In more than a decade, Ocado has spent billions of dollars building its business. In the same period, its growth has been lackluster while its losses have continued rising. 

Now, instead of focusing on profitability, the company is doubling down on more investments. In a statement on Tuesday, Ocado said that it will raise 575 million pounds from investors to fund its tech division. At the same time, it has agreed to a new 300 million credit facility from a number of large banks. This financing will be used to accelerate its innovation investments.

The fundraising came a day after Fitch downgraded Ocado to negative. The ratings agency noted that the company’s warehousing business will struggle to become profitable. Therefore, with inflation surging and the cost of doing business soaring, Ocado will struggle to turn a profit this year.

Ocado share price forecast

The daily chart shows that the OCDO share price has been in a strong bearish trend in the past few months. The shares remain below the 25-day and 50-day moving averages while the MACD is along the neutral point. It is also below the descending channel shown in pink. 

Therefore, with profitability and growth being elusive, there is a likelihood that the stock will continue falling in the coming weeks. If this happens, the next key support is the YTD low of 700p. A move above the key resistance at 900p will invalidate this view.