Ocado’s share price is finding it hard to gain upside traction this Tuesday, as shoppers have started to express fears about the company’s ability to expand its delivery services to cater for the expected holiday shopping rush in the light of new lockdowns.
Several clients are complaining loudly on social media platforms about their inability to place orders, bringing back memories of the horror show in the early days of the Ocado-M&S partnership where Ocado’s order fulfilment capacity was overwhelmed.
An Ocado spokesman tried to reassure customers, saying that the company was “working hard” to smoothen the process of access to Christmas deliveries using a staggered slot release approach.
Last week, analysts at Barclays had downgraded their outlook for Ocado, saying that Ocado’s current valuation implied an improbable chance of acquiring new customers. Barclays analysts point to the non-acquisition of any new deals by the company’s Solutions division as a pointer in this direction.
Ocado presently trades marginally lower on the day at 2432.
Ocado stock finds itself testing the resistance-turned-support at 2440 after yesterday’s bullish close took the stock beyond this price level. The pinbar pattern on the daily candle indicates buyers forcing prices back up after an initial intraday low at 2395. A bounce on this new support gives Ocado a chance at targeting 2582 (August 27 and September 3 lows), with the chance of hitting 2741 if the price action gains bullish momentum.
On the flip side, an extension of the decline that started from September 30 takes Ocado towards the 2354 support level. Further support also lies at 2247, where the lows of Friday, October 9 and Monday, October 12 reinforce previous lows of August 20. We also have the potential of 2180 and 2078 lining up as downside targets if the decline is extensive.
