The Ocado share price is attempting to recover even as the outlook for the UK economy dims. OCDO is trading at $810.8, which is slightly above the year-to-date low of 696p. As a result, the company’s market cap has moved back above 6 billion pounds. This means that investors have lost over 12 billion pounds since its crash started in November 2020.
Ocado has been in a strong sell-off for several reasons. First, broadly, there are signs that the shift to e-commerce is slowing in the UK. The most recent data showed that online sales declined by more than 10% in February as people embraced shopping in stores. Second, the shares have dropped as investors dump tech and growth stocks. Indeed, in the United States, the Nasdaq 100 index has crashed by more than 20% this year.
Most importantly, investors are worried about Ocado’s lack of profitability. In the past decade, the firm has been spending a lot of money on investments. As a result, the management has been promising that profitability will soon come in this period. However, achieving profitability has been elusive. The most recent annual report showed that the company’s revenue rose by 7.2% to 2.49 billion pounds while its loss before tax ballooned to over 176 million pounds.
Ocado share price forecast
On the 1D chart, we see that the Ocado stock price formed a hammer pattern last week. This pattern is characterised by a small body and long lower shadow. It is even more evident on the weekly chart. In price action analysis, this pattern is usually a bullish sign, especially when it is followed by a green candlestick.
The stock remains below all moving averages because of its remarkable sell-off. Therefore, there is a likelihood that the OCDO stock will have a sustained relief rally in the coming days. If this happens, the next key level to watch will be at 930p. A drop below the support at 750p will invalidate the bullish view.