Ocado Faces Shareholder Pressure to Consider New York Stock Listing

Ocado faces pressure to move its stock listing from London to New York, seeking higher valuations amid a 90% share price collapse. The decision highlights the growing trend of British firms seeking better prospects in the US market.

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Bijay Laxmi
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Ocado Faces Shareholder Pressure to Consider New York Stock Listing

Ocado Faces Shareholder Pressure to Consider New York Stock Listing

Ocado, the British online grocer and technology company, is under shareholder pressure to consider moving its stock listing from London to New York. The company has seen its share price collapse by 90% amid concerns over lower valuations in the UK compared to the US market.

Ocado's market capitalization has plummeted from over £22 billion to less than £3 billion. Investors believe the company could command higher valuations in the US, where companies tend to be valued at around 25 times earnings compared to 15 times in the UK. The decision by other major British companies to list in the US has also stoked fears that the London stock market is in danger of becoming a "backwater" for equities.

Why this matters: Ocado's potential move to the New York Stock Exchange highlights the growing trend of British companies seeking higher valuations and investor interest in the US market. This shift raises concerns about the competitiveness and attractiveness of the London stock market for technology and growth companies.

Ocado operates in three segments: Technology Solutions, Ocado Logistics, and Ocado Retail. The company is involved in the software and robotics platform business, providing the Ocado Smart Platform as a managed service and selling its technology to warehouse environments in non-grocery markets. Despite its innovative technology, Ocado has faced financial challenges, with a trailing P/E ratio not available, a profit margin of -11.11%, and a return on equity of -22.46%.

Wall Street research analysts have a consensus "reduce" recommendation on Ocado's stock, with a 12-month average target price of GBX 526.67, suggesting a potential upside of 51.7%. However, the company's delivery partnership with Marks & Spencer could complicate a potential move, and Ocado has ruled out terminating its exclusivity deal with US grocery giant Kroger.

As of April 21, 2024, Ocado's stock has decreased by 54.2% since the start of the year, trading at GBX 347.20. The company reported revenue of £2.82 billion for the trailing 12 months but posted a net loss of £314 million, or a diluted EPS of -£0.38.

In a statement, an Ocado spokesperson said, "We are aware of the concerns raised by some shareholders regarding our current stock listing. The board is committed to maximizing shareholder value and will carefully consider all options, including a potential move to the New York Stock Exchange. However, any decision will be made in the best interests of the company and all stakeholders."

Key Takeaways

  • Ocado faces pressure to move its stock listing from London to New York for higher valuations.
  • Ocado's market cap has plummeted from £22B to £3B amid concerns over lower UK vs US valuations.
  • Ocado operates in technology, logistics, and retail, but faces financial challenges with negative profit margin.
  • Analysts recommend "reduce" on Ocado stock, though a potential move could be complicated by existing deals.
  • Ocado's stock has decreased 54.2% YTD, trading at GBX 347.20 with a net loss of £314M.