- Summary:
- Ocado share price has risen sharply today as the UK moves into another lockdown. This means that the company will see more sales as people shop from home
Ocado share price is flying today. Up by more than 3.50%, the stock is the second-best-performing in the FTSE 100 index after Fresnillo. It is trading at 2,285p, bringing its total market cap to more than £17 billion.
What’s happening: For starters, Ocado is a major e-commerce platform in the UK. Through its new partnership with Marks and Spencer, the company reaches thousands of customers in the UK every month. Internationally, the firm has entered into partnerships with companies like Kroger to implement their delivery services.
So, why is Ocado share price rising: The stock is rising because investors are now pricing in a robust online sales in the UK. That’s because the government has announced a new lockdown to prevent a new strain of the virus.
As such, with Christmas and the new year just a few days ago, investors believe that Ocado will be a key beneficiary of this. Indeed, the firm recorded robust sales in the previous lockdowns. It also boosted full-year outlook and doubled its profit recently.
What about costs: Still, investors are worried about the rising costs as more people move to boost their e-commerce spending. In a recent note, analysts at Fitch said:
“Ocado will incur operating costs not covered by any revenue until the international CFCs are operating, in line with IFRS15. We anticipate Ocado solutions (UK solutions & logistics and international solutions) to move towards break-even by 2022 and break-even in 2023.”
What next for Ocado shares: On the daily chart, we see that Ocado shares have been in a tight range recently. They have oscillated between the support and resistance levels at 2,128p and 2,357p, respectively.
This price is between 23.6% and 38.2% Fibonacci retracement levels. It is also slightly above the 25-day and 15-day exponential moving averages.
Therefore, in the near term, the shares will likely remain in the current range and then break-out lower.
Ocado share price chart
